How 40% GST Hike Could Shift Buyer Demand from Ready-to-Move to Raw Apartments

The proposed 40% GST on imported luxury fittings is expected to significantly shift demand from ready-to-move apartments toward raw apartments. Ready-to-move homes, which include imported kitchens, wardrobes, and luxury fittings, will see a steep rise in prices due to higher GST. In contrast, raw apartments (delivered without interiors) give buyers flexibility to stagger purchases, control costs, and avoid the immediate tax burden. Developers are already adapting by offering more raw apartments in the luxury segment, making them a preferred choice for high-net-worth buyers in 2025.

Why Does a 40% GST on Imported Fittings Matter for Buyers?

The GST hike from 28% to 40% on imported fittings directly impacts the final cost of luxury homes. Items like Italian marble, European kitchens, and German wardrobes account for 10–15% of a project’s cost.

• Example: In a ₹10 crore apartment, imported interiors worth ₹2 crore would earlier attract ₹56 lakh GST (28%). Under 40%, the tax rises to ₹80 lakh an additional ₹24 lakh per unit.
• Across a 50-unit luxury project, this tax hike can add ₹12 crore+ to the overall project cost.

Developers often pass on these costs to buyers, making ready-to-move homes less affordable.

How Does Higher GST Impact Ready-to-Move Apartments?

Ready-to-move apartments are delivered with fully finished interiors. Since developers bulk import fittings, the entire GST burden is factored upfront into the sale price.

Impact on buyers:

• Higher ticket price due to inflated GST on interiors.
• Limited flexibility buyers pay for interiors they may not fully want.
• Increased stamp duty and registration costs since these are calculated on the final sale price.

Thus, what was once a convenience product (plug-and-play homes) risks becoming an expensive choice.

Why Are Raw Apartments Becoming More Attractive?

Raw apartment units sold without interiors are gaining traction under the new GST regime.

Advantages for buyers:

• Tax efficiency: No GST on interiors bundled into apartment price.
• Flexibility: Buyers can stagger purchases of fittings, spreading costs over years.
• Customization: Interiors are done as per individual taste, instead of standard developer finishes.

For high-end buyers, avoiding a 40% GST on interiors can save lakhs to crores, making raw units a smarter financial move.

Comparison: Ready-to-Move vs Raw Apartments After 40% GST

How Much Will Buyer Prices Actually Rise Under 40% GST?

For context, let’s calculate potential cost changes:

This shows how higher-value homes face a disproportionate rise in costs, directly influencing buyer decisions.

How Quickly Will Demand Shift Toward Raw Apartments?

Market analysts expect the demand shift to happen within 3–6 months of implementation.

Reasons for rapid shift:

1. Immediate price impact on ready-to-move homes.
2. Affluent buyers adapt quickly, choosing cost-efficient models.
3. Developers respond fast to preserve sales by launching more raw apartments.

Within 6–12 months, raw apartments may become the default offering in luxury projects, with ready-to-move available only for ultra-premium convenience buyers.

What Strategies Will Developers Use to Stay Competitive?

Developers cannot ignore this market reality. Likely strategies include:

• Increased raw-unit offerings in luxury projects.
• Optional interior packages are sold separately (instead of bundled pricing).
• Partnerships with interior firms, allowing phased customization.
• Marketing repositioning: shifting the narrative from “luxury delivered” to “luxury curated.”

This strategy helps keep base prices attractive while still offering premium fit-out services to willing buyers.

How Will NRIs and Investors Respond?

NRIs, who are a large segment of luxury real estate buyers, often prefer ready-to-move homes for convenience. However, with GST adding 20–40 lakh extra per unit, even NRIs may:

• Buy raw units and appoint local interior designers.
• Stagger investments to optimize tax exposure.
• Focus on capital appreciation over ready occupancy.

For investors, raw apartments are more attractive as they come at a lower ticket price, making resale margins healthier.

What Are the Long-Term Implications of This GST Change?

1. Market Rebalancing: More raw apartments in luxury projects.
2. Price Transparency: Buyers can compare the shell cost vs the fit-out cost.
3. Shift in Buyer Profile: Customization-seeking buyers dominate the luxury segment.
4. Tax Management: Buyers stagger purchases for efficiency.

Over time, this may push India’s luxury housing closer to global models, where buyers purchase “shell apartments” and commission interiors separately.

Key Takeaways (In Short)

• 40% GST on imported fittings inflates ready-to-move apartment prices.
• Raw apartments emerge as cost-efficient, customizable alternatives.
• Buyers save lakhs to crores by sourcing interiors themselves.
• Developers shift strategies to keep pricing competitive.
• Demand shift is expected within 6–12 months of policy change.

Conclusion

The proposed 40% GST on imported luxury fittings is a game-changer for India’s luxury housing market. It raises the cost of ready-to-move apartments significantly, tilting demand toward raw apartments that allow buyers to stagger investments, optimize taxes, and enjoy personalized interiors. Developers, NRIs, and investors are likely to adapt quickly, making raw apartments the new standard in premium projects.

For homebuyers and investors exploring India’s luxury housing, this is a crucial time to reassess strategies. Whether you’re planning to buy a ready-to-move unit or a raw apartment, the GST impact must be factored into your decision.