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The rollout of GST 2.0 on September 22, 2025, following the 56th GST Council meeting, sparked hope for homebuyers. By slashing taxes on construction materials—cement from 28% to 18%, bricks and tiles from 18% to 5%—it promised to lower building costs, potentially trimming home prices by 3-5%. Yet, while GST 2.0 simplifies taxation, affordability isn’t a given. The real impact depends on the type of property you’re eyeing and whether it’s under construction or ready to move in.
When you set out to buy a home, whether in a bustling metro like Mumbai or a growing suburb, GST 2.0 shapes your options in distinct ways. The tax structure influences costs based on whether you choose an under-construction project or a ready-to-move property, and whether it falls under the “affordable” category (under Rs. 45 lakh, up to 60 sq. m. carpet area in metros) or a higher-end segment.
Under-Construction Homes: Savings with Strings
Consider an under-construction project, often marketed as budget-friendly. For an affordable unit priced at Rs. 42 lakh, GST is a low 1%, applied to the property’s value minus 33% for land cost. This adds roughly Rs. 35,000 in tax—far less than the 8-12% effective rates before GST reforms. Developers may also highlight savings from GST 2.0’s lower material taxes, potentially cutting the base price by Rs. 1.5 lakh. If eligible, schemes like the Pradhan Mantri Awas Yojana (PMAY) could shave off another Rs. 2.5 lakh, keeping EMIs manageable.
But there’s a hitch. For under-construction homes, developers can’t claim input tax credits (ITC) on materials like cement or steel, even with GST 2.0’s reduced rates. The 4% cost savings on materials don’t always reach you, as developers may retain them to offset other expenses. Anti-profiteering rules exist, but enforcement is inconsistent. Plus, under-construction projects often take two years or more, meaning you’re stuck paying rent—say, Rs. 15,000 monthly, or Rs. 3.6 lakh over two years. Delays, common in real estate, could inflate this further. For non-affordable units (above Rs. 45 lakh or larger than 60 sq. m.), the GST jumps to 5%, adding a heftier tax burden without ITC relief.
Ready-to-Move Homes: Tax-Free, but Pricier Upfront
Now, picture a ready-to-move home, priced higher—say, Rs. 55 lakh for a similar-sized unit. The big win here is zero GST, as properties with completion certificates are exempt. This eliminates the 1% or 5% tax you’d face on under-construction homes. Lower material costs from GST 2.0 also help developers avoid hiking charges for amenities like parking or gyms. Moving in immediately means no ongoing rent, and you could even sublet the property for extra income, offsetting a higher EMI of, say, Rs. 32,000.
Decoding GST 2.0’s Structure
GST 2.0 streamlined India’s tax slabs from four to three: 5% for merit goods, 18% for standard items like cement, and 40% for luxury or “sin” goods. This reduces compliance hassles and cuts material costs significantly—cement’s 10-point drop is a game-changer for developers. Real estate demand has surged 15% in some markets, fueled by these savings and festive discounts. But the benefits vary. Without ITC, under-construction homes pass GST costs (1% or 5%) directly to you, and material savings may not fully translate to lower prices. Ready-to-move homes, free of GST, offer clarity and immediate savings on rent, but their higher upfront cost can strain budgets.
Crunching the Numbers
Compare the two paths. An under-construction Rs. 42 lakh home, after 1% GST and two years’ rent at Rs. 15,000/month, effectively costs around Rs. 46 lakh. A Rs. 55 lakh ready-to-move home, with no GST and the option to sublet for Rs. 20,000/month, could net out closer to budget over time. In overheated markets, non-affordable under-construction homes can cost 5-8% more due to the 5% GST and no ITC, making ready-to-move options often more predictable.
What It Means for You
As of October 12, 2025, GST 2.0 has sparked a real estate frenzy, with developers dangling discounts and buyers flocking to showrooms. But affordability isn’t guaranteed. Ready-to-move homes shine for their tax exemption and immediate possession, sparing you rent and uncertainty. Under-construction projects tempt with lower prices and subsidies like PMAY, but the lack of ITC and potential delays can erode savings. Whether you’re chasing an affordable flat or a mid-segment dream, the key is to weigh the stage (under-construction vs. ready), type (affordable vs. non-affordable), and hidden costs like rent or delays. GST 2.0 opens doors, but only careful math ensures you walk through the right one.
