GST 2.0: How Reduced Taxes on Construction Materials Will Lower Housing Prices in Odisha

Bhubaneswar: In a significant move poised to reshape the real estate landscape, the Centre has introduced GST 2.0, reducing taxes on essential construction materials such as cement and steel.

This tax cut, from 28% to 18% on key construction materials, is expected to lower housing prices across Odisha, particularly in cities like Bhubaneswar, Cuttack, Rourkela, Puri, and Berhampur, where apartments are blooming.


Industry experts predict that the average price per square foot in Bhubaneswar, currently at Rs 5,500, could decrease by at least Rs 500. This reduction is anticipated to make homeownership more accessible, fulfilling the dreams of many prospective buyers.

Samyak Jain, director of a leading real estate firm, hailed the GST council’s decision as a landmark reform since 2017, emphasising its potential to streamline the housing and construction sectors. “The council’s move to a simpler two-tier tax structure eliminates rate ambiguities. It fosters a transparent and efficient system beneficial to both consumers and businesses,” Jain said.

The reform extends beyond cement and steel, affecting other construction inputs like paints, tiles, and electricals, which have also seen a tax reduction from 28% to 18%. This is expected to ease overall construction costs significantly, experts say.

Ashish Agrawal, another realtor, noted that the RBI is likely to maintain current interest rates, further enhancing housing affordability. “The combination of GST rationalisation and stable interest rates will boost buyer confidence and support sustained growth in India’s housing market,” Agrawal said.

Prospective homebuyers are watchful about the changes. Anita Jena, a prospective homeowner, expressed her anticipation. “High taxes have been a major hurdle in purchasing a home. The reduction in construction material taxes is a promising development,” she said.

The GST reduction also extends to materials like marble and granite, now taxed at 5% instead of 12%. Experts estimate that these changes could reduce construction costs by 3% to 5%, particularly benefiting affordable and mid-income housing segments.

Industry analyst Jajati Patnaik highlighted the potential impact on tier-II and III cities, where price sensitivity is high. “Developers are likely to pass on cost savings to buyers, making homes more affordable,” Patnaik said.