Real estate stocks rally on GST rate cut boost
Publish on : 2019-02-25 13:08:50
NEW DELHI: Most real estate stocks were trading higher in early trade on Monday after the GST Council on Sunday cut tax rates on under-construction flats to 5 percent and affordable homes to 1 percent, effective April 1.
The Nifty Realty index was trading 2.25 percent higher at 238.40 at around 9.22 am (IST), while the BSE Sensex was up 0.33 per cent at 10,827.25.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The reduction in the GST rates for under-construction projects is the most decisive move by the GST council with a clear focus on demand stimulation. This move will give the necessary fillip to the demand in the under-construction segment, which has been suffering from low sales levels for the last many quarters.”
He further added that the elimination of input credit tax benefit may hit profitability for the supply side. However, the potential demand generation as a result of this move will far outweigh any negative aspects leading to greater sales numbers and revenues.
At present, the GST is levied at 12 per cent with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate is not issued at the time of sale. For affordable housing units, the existing tax rate is 8 per cent.