Realty stocks to see action after GST cut

Mumbai: Real estate stocks are likely to be in focus on Monday following the GST Council’s decision to slash the rate of tax on under-construction and affordable housing projects.

The decision, along with the interest rate cut announced by the Reserve Bank of India earlier this month, will provide an impetus to a sector that has been reeling under pressure since the introduction of GST in July 2017 and demonetisation in late 2016, market trackers said. Shares of a few realty companies have gained since the RBI rate cut.

The BSE Realty Index is down 1 per cent year to-date, in line with the broader Nifty. While DLF, hit also by political developments, is trading 6 per cent lower, Godrej Properties and Oberoi Realty have both gained 10 per cent since the start of the year.

On Sunday, the GST Council reduced the tax rate on under-construction projects to 5 per cent from 12 per cent and on affordable houses to 1 per cent from 8 per cent, effective April 1. However, builders will no longer be allowed to claim input tax credit.

“The affordable segment has got a major push and buyers of this segment will benefit immensely. This will cause sales of housing units within this segment to rise to a significant extent,” said Anuj Puri, chairman of Anarock Property Consultants. “Most players currently have considerable unsold stock within this segment.”

Alok Ranjan, head of Research at Way2Wealth, said the GST cut would provide an additional help for the sector. “With interest rates also stabilising, and expected to go down further, this is a positive for companies,” he said.