By Arosh John | Real Estate Consultant & Founder – John Real Estate, Thane Real Estate News
Introduction
The Goods and Services Tax (GST) Council is set to discuss a major rate rationalisation in its upcoming September meeting. The proposal aims to streamline the system into two key slabs – 5% and 18% – while retaining a higher band for luxury/sin goods. For real estate, where construction inputs and compliance already shape buyer affordability, this change could alter cost dynamics in Thane and the wider Mumbai Metropolitan Region (MMR).
Impact on Construction Costs
At present, critical inputs such as cement and paint attract 28% GST, while steel, tiles, and sanitaryware fall under 18%. If the slabs are rationalised, cement and paint could move down to 18%, cutting the tax burden on these items significantly.
- Cement accounts for around 10–12% of a project’s construction cost.
- A reduction from 28% to 18% could lower overall project costs by about 1%, depending on the scale and procurement.
However, it is important to note that in MMR, land premiums and approval charges form 20–30% of project costs. These are outside GST’s ambit. Therefore, while input cost relief is welcome, it won’t single-handedly trigger steep price corrections.
Effect on Housing Segments
- Affordable Housing (≤₹45 lakh): Already taxed at 1% without ITC. Direct GST rate changes won’t alter this much. The only real game-changer here would be restoration of Input Tax Credit (ITC), which is not on the table yet.
- Mid-Segment Housing: At present taxed at 5% without ITC. If input costs fall, developers may have 2–3% pricing flexibility. This could encourage absorption in micro-markets like Ghodbunder Road and Kalyan–Dombivli, where price sensitivity is high.
- Luxury Housing: While construction inputs may get cheaper, there is discussion of a higher GST band (~40%) on luxury fittings and imported interiors. Developers may increasingly offer ‘raw apartments’ and let buyers customise interiors separately.
Pricing & Demand in Thane/MMR
For buyers in Thane and MMR, the net impact will be modest in the near term:
- Under-construction properties could see limited relief passed on via project launches or promotional schemes.
- Ready-to-move/OC homes remain outside GST, so prices there are unaffected.
- Demand drivers such as home loan EMIs, job market stability, and infrastructure progress (e.g., Metro Line 4 & 5, Thane–Borivali Tunnel, Navi Mumbai Airport connectivity) will continue to outweigh tax changes in influencing buyer decisions.
Even a 1–2% reduction in effective pricing, however, can help convert fence-sitters, particularly in mid-segment launches.
What to Expect in the Coming Months
- GST Council outcome (September 2025): If rationalisation is approved, official notifications on revised input rates (cement, paint) should follow.
- Pass-through to buyers: Expect savings to show up as limited price adjustments, offers, or spec upgrades rather than list-price cuts.
- Luxury repositioning: Developers may adopt core-and-shell deliveries to counter higher GST on luxury interiors.
- No immediate ITC relief: As of now, there is no government indication of ITC restoration for residential real estate.
Editor’s Take
For Thane and MMR, the biggest beneficiaries of GST rationalisation will be developers, who gain clarity and reduced input costs. For homebuyers, the outcome is incremental, not transformational. Prices in the mid-segment may ease slightly, while affordability stress in the region will still be shaped more by financing costs and state levies than by GST alone.
That said, any relief in material costs is positive—and in a competitive market like Thane, even modest savings could translate into faster sales cycles and improved buyer sentiment.
About the Author
Arosh John is a Thane-based Real Estate Consultant with over a decade of experience advising homebuyers, NRIs, and investors. He is the Founder of John Real Estate (MahaRERA Registered & ISO Certified) and the voice behind Thane Real Estate News (Thanerealestatenews.com), a dedicated knowledge platform offering fact-checked updates, project reviews, and investment insights.
Disclaimer
This article is intended for general informational purposes only. It is based on updates and discussions around the GST rationalisation proposal as reported by credible government and financial media sources, including the GST Council’s agenda announcements and official press briefings. Actual impacts will depend on final notifications issued by the Government of India and GST Council. Readers are advised to consult tax professionals or official government releases for specific guidance.
