Will the GST Cut on Cement Save India’s Struggling Affordable Housing Market?

If you’ve been following India’s real estate developments, you've probably heard the buzz: there's a strong push to cut the GST (Goods and Services Tax) on cement. Cement – the very foundation (literally) of every building, road, and infrastructure project – is currently taxed at a steep 28%. But with growing pressure from developers and economists alike, there’s rising hope that the government may finally bring this rate down.

But here’s the big question – will a GST cut on cement really revive India’s struggling affordable housing market?

The Current State of Affordable Housing in India

Over the past decade, India has made ambitious efforts to boost affordable housing. Schemes like Pradhan Mantri Awas Yojana (PMAY) aimed to make housing accessible to every citizen, especially the urban poor. But despite good intentions, the reality on the ground has been far from perfect.

Many developers have exited the affordable housing space, citing poor margins, high input costs, and regulatory red tape. Meanwhile, buyers especially low-income groups – are facing rising home prices and shrinking loan eligibility due to inflation and job uncertainties.

This is where the cost of construction materials, especially cement, comes into play.

Why Cement Prices Matter So Much

Cement is one of the biggest cost components in construction. It’s estimated that cement alone accounts for 15-20% of the total cost of building a house. In a price-sensitive sector like affordable housing, every rupee saved counts.

Currently, cement is taxed under the highest GST slab – 28%. That’s the same rate as luxury goods like perfumes and air-conditioners. For a product as essential as cement, this has long seemed unfair, especially when affordable housing is a social priority.

If the GST on cement were reduced to, say, 18% or even 12%, it could lead to:

• Lower input costs for developers
  
  

• More competitive pricing for buyers
  
  

• Increased participation by private builders in affordable housing
  
  

• Potential revival of stalled or delayed projects
  
  

What the Industry is Saying

Developers and industry bodies have been vocal about the need for a GST cut. The Confederation of Real Estate Developers' Associations of India (CREDAI) has repeatedly urged the government to reconsider the cement GST slab.

Many argue that it’s not just about affordability – it’s also about economic stimulus. Lower GST means more projects, more jobs in construction, and more demand for allied sectors like steel, tiles, plumbing, etc.

It could become a virtuous cycle – where lower tax drives more construction, which boosts employment, improves housing access, and contributes to GDP growth.

Will a GST Cut Alone Be Enough?

Here’s where we need to be realistic.

While a GST cut on cement can certainly help, it’s not a silver bullet. The affordable housing sector is grappling with deeper challenges:

• Land costs remain high in most urban centers
  
  

• Finance access for low-income buyers is still limited
  
  

• Project delays due to approvals and red tape discourage private investment
  
  

• Quality and livability issues continue to plague many budget projects
  
  

So, while lowering cement GST can make housing cheaper to build, it won’t automatically make it easier to sell or deliver unless these systemic issues are also addressed.

What Should the Government Do?

If the government is serious about reviving affordable housing, here’s a three-pronged approach that could actually work:

1. Cut GST on cement – from 28% to at least 18%, ideally 12% for affordable housing projects.
   
   

2. Ease funding – push banks and NBFCs to lend more to first-time homebuyers in the low-income segment.
   
   

3. Speed up approvals – reduce bureaucratic delays that eat into project timelines and profits.
   
   

Combined, these steps could breathe life into a sector that desperately needs it.

Reducing the GST on cement might seem like a small step, but it could have a huge ripple effect. For a country where “housing for all” is still a work in progress, every bit of cost saving helps.

The real estate sector is watching closely. Buyers are hoping. Developers are lobbying. And the government? It has a decision to make – stick with the status quo or support a long-overdue change that could put affordable housing back on track.