Mid-format housing projects that can most win from GST rationalization, says Amit Mamgain

The recent GST rationalization on cement and important building materials is expected to provide the biggest benefits for medium-sized housing projects, according to Amit Mamgain, director of Yugen Infra.

He notes that lower tax pressures will facilitate the budgeting pressure for developers, improve cash flows and increase the confidence of the buyers – especially on the metro markets.

Although affordable homes remain largely untouched due to the lower GST rates, the middle segment is probably witnessed by stronger demand and faster project implementation in the coming months. Edited fragments –

V) What kind of impact do you see post-gst rationalization if the council lowers the rates on cement and material?

A) Project delays are taking place as a result of the fluctuating price of raw materials that disrupts budgeting and the cash flow, but with the reduction of the tax on cement, which is fundamental to commercial and residential projects, we experience an exemption in budgeting pressure.

In addition, with the load on finishing and structural materials such as granite and limestone, the purchasing power of builders will improve, and this is considerably beneficial for both buyers and developers, especially in metro cities.

V) How quickly do developers reflect these cost savings probably in the prices for home buyers – especially in current projects that are still under older contracts?

A) We cannot expect an immediate drop. The benefits will be reflected in the new projects because the existing projects are already bound by agreements.

Q) With GST on cement reduction from 28% to 18%, and on materials such as marble, granite and bricks lowered from 12% to 5%, how much can the average construction costs fall realistically?

A) Affordable housing projects would not be influenced much, since their GST costs are already 1%. In other projects the cost reduction can be less than 4%.

But the luxury houses will see a dramatic increase as the GST speed is increased at imported materials.

V) Which living segments will probably benefit the most?

A) The medium-sized housing segments will benefit the most from the GST rate reductions. We will see improved market confidence in buyers of home and an increase in demand. Builders will have a better cash flow, which will contribute to the win-win situation.

V) When will the new GST rates become realistic in new tender negotiations and models for developer costs?

A) They will start reflecting as soon as the rationalized rates have been applied, ie after 22 September 2025. However, contractors and developers start to draw up their propositions in advance to ensure the seamless approval of the new rates.

V) Can these tariff reductions strengthen new project launches and accelerate the housing stock in important urban markets?

A) The GST cuts have reduced the raw material costs with a good margin, which will certainly stimulate urban development.

The buyers will find homes more affordable, while builders can have a greater availability of credit, which will increase demand and increases the completion speed of the project. Builders can also control projects with improved liquidity.

((Indemnification: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)