GST Revamp 2025: Will Price Reductions Balance Luxury Home Costs in India?

Residential and Commercial

Since 2010

GST Revamp 2025: Will Price Reductions Balance Luxury Home Costs in India?

Residential and Commercial

Since 2010

Key Takeaways!

Key Takeaways
- A proposed 40% GST on imported fittings could increase the cost of luxury homes by ₹24 lakh per ₹10 crore apartment.
- A reduction in the GST on cement (from 28% to 18%) may offset interior cost hikes, stabilising property prices.
- Developers may offer raw apartments at lower prices, shifting interior costs to buyers.
- Buyers should consider ready-to-move homes (GST-free) or stagger interior purchases to manage tax implications.
- Realty Z Estate guides buyers through India’s luxury market with expert investment strategies.

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By Team Realty Z Estate | August 31, 2025 | Read Time: ~5 Minutes

The proposed GST revamp, scheduled for review at the GST Council’s meeting on September 4, 2025, introduces a 40% slab on imported luxury goods, raising concerns about higher prices for luxury homes. However, a simultaneous reduction in cement GST from 28% to 18% could offset costs, potentially stabilising or even lowering property prices in India’s booming real estate market. For buyers like Rohan Ahuja, who are eyeing a ₹10 crore apartment in South Mumbai, this balance could influence their purchase decisions. Team Realty Z Estate examines how the GST changes may impact luxury home costs nationwide and what homebuyers should be aware of as of August 31, 2025.

GST Revamp: A Mixed Impact on Luxury Homes

The proposed 40% GST on imported fittings, such as high-end kitchen systems and premium flooring, threatens to increase construction costs for luxury projects. For a ₹10 crore apartment, developers typically spend ₹2 crore on imported interiors. At the current 28% GST, the tax is ₹56 lakh, making the interiors cost ₹2.56 crore and the total property price ₹12.56 crore. A 40% GST raises the tax to ₹80 lakh, pushing the interiors to ₹2.8 crore and the apartment to ₹12.8 crore—an extra ₹24 lakh per unit. Across a 50-unit project, this adds ₹12 crore to costs.

Cost Increase: ₹24 lakh hike per ₹10 crore apartment due to 40% GST on interiors.
Developer Challenge: Absorb costs to protect margins or pass to buyers, risking demand.
Market Context: High borrowing costs already pressure the luxury real estate market.

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Cement GST Cut: A Price Stabiliser

A proposed reduction in the cement GST from 28% to 18% would offer relief. Cement accounts for ~15% of a luxury project’s cost, while imported interiors contribute 10–15%. If cement costs drop by 10% and interiors rise by 12% due to the GST hike, the net impact on project costs could be minimal. This balance may prevent significant price hikes, potentially leading to stable or reduced luxury home prices in cities like Mumbai, Delhi-NCR, Bengaluru, and Hyderabad.

Offset Mechanism: 10% cement cost reduction counters 12% interior cost increase.
Long-Term Outlook: Minimal net cost change for projects starting post-revamp.
Expert View: “GST 2.0’s impact must be viewed holistically,” says Vivek Jalan, Partner, Tax Connect Advisory Services.

Raw Apartments: A Cost-Saving Trend?

To manage costs, developers may shift to ‘raw apartments,’ delivering homes without interiors, allowing buyers to source their own fittings. This could lower property prices by excluding high-GST interiors, offering buyers flexibility to customise while avoiding tax burdens. Ready-to-move homes (GST-free with completion certificates) remain attractive, but raw apartments appeal to those seeking cost control.

Trend Shift: Raw apartments reduce developer costs, potentially lowering home prices.
Buyer Options: Ready-to-move homes avoid GST; raw apartments offer customisation.
Insight: “Luxury persists, but packaging may shift,” says Kunal Sharma, Taraksh Lawyers & Consultants.

Developer Strategies to Leverage GST Changes

Developers can mitigate the 40% GST impact by purchasing interiors at the current 28% rate before the September 4 decision takes effect. For ongoing projects, cement savings will be beneficial. Still, near-completion projects may face margin pressure if interiors are sourced after the hike. By offering raw apartments, developers can maintain competitive prices, aligning with market demand for cost-effective luxury.

Pre-Hike Stocking: Buy interiors at 28% GST before the rate change.
Cost Management: Cement savings stabilise project budgets in the long term.
Price Strategy: Raw apartments could reduce home prices, boosting sales.

Homebuyer Checklist: Navigating GST for Cost Savings

For buyers like Rohan planning a ₹10 crore apartment purchase, here’s how to leverage the GST revamp:

Verify Property Status: Choose ready-to-move homes (GST-free) or under-construction apartments (5% GST) based on budget.
Consider Raw Apartments: Opt for homes without interiors to avoid a 40% GST, and source fittings independently.
Stagger Interior Costs: Spread purchases over phases to manage tax expenses if the GST rate rises.
Monitor GST Decision: Track the outcomes of the September 4, 2025, GST Council meeting to clarify rates.
Consult Experts: Engage tax and real estate advisors like RealtyZ Estate to optimise costs and ensure compliance.

Realty Z Estate’s Take

The GST revamp’s 40% slab on fittings may be offset by cement savings, potentially stabilising luxury home prices,” says Team Realty Z Estate. “From South Mumbai to Bengaluru, we guide buyers to navigate raw apartments and ready-to-move options for smart investments.” Contact us for tailored advice on India’s premium real estate market!