Buying or building a home involves significant planning, not only for the property but also for interiors, appliances, and finishing touches. With the rollout of GST 2.0 on September 22, 2025, the tax structure has changed in a way that directly impacts homebuyers. Understanding how much tax you’ll now pay on construction materials, furniture, and household goods can help you plan your budget better.
What is GST 2.0?
GST 2.0 has simplified the earlier multi-slab system into a more streamlined structure. The older 12% and 28% slabs have been removed for most goods. Now, the tax system broadly has:
- 5% slab – for essential and daily-use items.
- 18% slab – for most mid-range and aspirational goods, including many home-related purchases.
- 40% slab – for ultra-luxury or premium goods, such as high-end imports or luxury fittings.
This change reduces the tax burden on many goods that were earlier taxed at 28% and brings clarity for homebuyers.
Tax Rates on Key Home-Related Items
Here’s how the new rates look for commonly purchased categories when you are setting up a home:
| Category | Earlier Rate | New GST 2.0 Rate | What It Means |
| Cement, concrete | 28% | 18% | Construction costs have reduced slightly. |
| Bricks, tiles, sand | 18% | 5% | Basic raw materials now attract lower tax. |
| Paints, coatings | 28% | 18% | Reduced but still higher than essentials. |
| Furniture (wood, metal, plastic) | 18–28% | 18% | Unified rate across categories. |
| Modular kitchen, wardrobes (custom/unbranded) | 12–18% | Around 12% | Interiors become more predictable in pricing. |
| Lighting, switches, wiring | 18–28% | 18% | Standardised under one slab. |
| Home appliances (TVs, ACs, fridge, washing machine) | 28% | 18% | Significant tax reduction on big appliances. |
| Daily household items (utensils, soaps, tableware) | 12–18% | 5% | Everyday essentials become more affordable. |
| Luxury or premium imports | 28% + cess | 40% | High-end items are now taxed at a premium rate. |
Example Cost Breakdown
Imagine you are furnishing a 3BHK with a modular kitchen, wardrobes, and essential appliances. Here’s an approximate illustration of what GST might look like under the new regime:
- Modular kitchen + cabinets: ₹3,00,000 → GST 12% → ₹36,000
- Wardrobes: ₹1,50,000 → GST 12% → ₹18,000
- False ceiling and gypsum work: ₹80,000 → GST 18% → ₹14,400
- Lighting and fixtures: ₹60,000 → GST 18% → ₹10,800
- Appliances (TV, fridge, ACs, washing machine): ₹5,00,000 → GST 18% → ₹90,000
- Daily household items: ₹50,000 → GST 5% → ₹2,500
Total base cost: ₹10,40,000
GST payable: ~₹1,71,700
Additionally, labor and service charges for design or installation usually attract 18% GST. Always ask contractors to provide a clear separation between material and service costs to avoid overpaying.
What Homebuyers Should Keep in Mind
- Check if benefits are passed on – With lower GST rates, ensure your builder or supplier is reducing costs accordingly.
- Demand valid GST invoices – Proper documentation with HSN or SAC codes protects you from misclassification.
- Separate materials and services – Since different portions attract different rates, clarity in billing prevents confusion.
- Be aware of misclassification – Mid-range items should not be wrongly billed under luxury categories.
- Plan purchases under GST 2.0 – Now that the system is in force, bulk buying could save costs compared to the transitional periods.
- Factor in premium goods – Imported luxury items or designer fittings may still come with a 40% tax, so budget carefully.
Key Takeaway
GST 2.0 has reshaped the tax landscape for homebuyers by bringing construction materials, furniture, and appliances under more uniform and lower slabs. Essentials are now taxed at 5%, aspirational goods at 18%, and only ultra-luxury items fall under the steep 40% slab. For anyone building or furnishing a dream home, this change means greater transparency, slightly reduced costs on big purchases, and easier planning.
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