India, Aug. 30 -- The proposed 40% GST slab is expected to push up costs in the luxury housing segment. While affluent buyers are generally less price-sensitive, higher taxation could still affect the timing of purchases. Developers, meanwhile, face a difficult choice - to absorb part of the cost and shrink margins, or pass it on to customers at the risk of slowing sales, say real estate experts.

They say that the proposed 40% GST on imported fittings would raise the cost of premium finishes and specialised materials, pushing up construction expenses. While ultra-luxury buyers may absorb the increase, developers will need to tread carefully.

Passing on the full burden could dampen demand in a market already strained by high borrowing co...