GST reforms boost cash flow, fueling co-working sector growth & innovation

GST reforms are set to accelerate India's co-working sector growth by reducing construction material costs, improving cash flow, & supporting demand from start-ups & enterprises, say industry experts

GST reforms are expected to elevate India’s co-working sector. The reductions in GST on key construction materials are likely to provide indirect relief by lowering input costs for workspace development and fit-outs. This, in turn, can ease operational expenses, improve cash flows, and accelerate expansion plans for operators.

 

Following the recent GST announcement by Finance Minister Nirmala Sitharaman, GST on co-working rentals was kept unchanged at 18%.

 

Industry players such as Urban Vault, 315 Work Avenue, and Buzzworks expect the reforms to strengthen demand from start-ups and enterprises alike, while also supporting the broader B2C ecosystem through improved affordability and infrastructure growth.

 

 

Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa at real estate consultancy CBRE, said GST reforms will further support a segment already experiencing strong growth.

 

“The simplified GST structure will ease compliance and reduce working capital blockage across industries. For the co-working sector, tax cuts on key construction inputs like cement and steel, along with easier compliance, are expected to bring down costs as well as time taken for expansion."

 

“As co-working operators, we invest heavily in infrastructure and fit-outs. Although GST input credits are available, the upfront outflow of GST has historically placed pressure on working capital. This will help co-working operators plan growth more efficiently and expand further," Bengaluru-based 315 Work Avenue founder Manas Mehrotra said.

 

The GST reform will significantly improve working capital management for co-working businesses and will support quicker scaling.

 

Making construction more viable will spur the development of modern, well-designed workplaces, ensuring talent nationwide access to world-class infrastructure to innovate, collaborate, and grow. By enabling sustainable commercial infrastructure, these reforms also strengthen job creation and foster entrepreneurship. 

 

Amal Mishra, CEO of Urban Vault, added, “By reducing input credit blockages and streamlining compliance, it will ensure healthier cash flows and faster turnaround cycles. For Urban Vault, this means more agility in reinvesting into our spaces and passing on those benefits to our clients, especially start-ups and enterprises that depend on flexible, cost-efficient office solutions.”

 

Co-working operators leased 65 lakh square feet of office space across seven major cities in the January-June period, marking a 48% year-on-year increase, according to Colliers India in June. The surge reflects rising demand from corporates for managed and flexible workspaces amid evolving workplace strategies.

 

India’s flexible workspace sector continues to show strong resilience and growth, with total stock projected to reach 124-126 million square feet across Tier I cities by the end of CY2027, expanding at a CAGR of 18-19%, according to a CBRE report.

 

“The recent GST revisions are a welcome boost for India’s workspace industry. The reduction in rates on key CAPEX items such as air conditioners from 28% to 18%, and on everyday OPEX essentials like milk, coffee, and food supplies, will enhance our ability to utilise Input Tax Credit and unlock more efficient tax set-offs. In real terms, this strengthens cash flow, frees capital for investments in fit-outs and technology, and creates space for operational optimisation. While detailed implications will emerge as experts unpack the changes, these reforms give BHIVE greater agility to sharpen operations, reinvest in customer-first centres, and scale sustainably across India,” said Arun Narayan, Co-Founder, BHIVE Workspace.