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Realty shares gain on GST rate cut

Realty shares gain on GST rate cut

Realty shares gain on GST rate cut
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By Mousumi Paul  Feb 25, 2019 10:36:09 AM IST (Published)

Shares of most real estate firms advanced on Monday after the GST Council reduced the tax rate on under-construction residential properties to 5 percent from 12 percent

Shares of most real estate firms advanced on Monday after the GST Council reduced the tax rate on under-construction residential properties to 5 percent from 12 percent. The tax rate on affordable housing was also cut to 1 percent from 8 percent earlier.

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At 10.18 AM, the Nifty Realty Index was up over 1 percent led by Unitech, which rose nearly 4 percent.  Shares of Sunteck Realty, Brigade Enterprises and Godrej Properties advanced over 2 percent. Indiabulls Real Estate, Oberoi Realty and Phoenix Mills gained up to 1.5 percent.
Here are few brokerage's viewpoint on the aftermath of the GST Council's rate cut:
Axis Capital said the luxury markets will likely benefit the most because the impact of disallowing input tax credit (ITC) will be minimal in these markets. Passing on the benefits of lower GST to customers will result in improvement in volumes and thus would help stressed developers to liquidate inventory and improve their cash flow position, added the brokerage.
Motilal Oswal expects fence sitters to show interest in buying under construction property and spur demand. Under the current situation and state of the real estate market, it will be difficult for developers to pass on the increased cost which shall be absorbed into the margins, added Motilal Oswal.
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