The implementation of GST can bring transparency in the construction and real estate industry, as per some property consultants.
Thus, GST is likely to bring about a major change in real estate sector at certain layers, but it all depends on the nature of transaction and rate of tax.
The GST bill would benefit the real estate sector by creating a uniform tax structure. This would lead to better tax compliance by the builders and developers. Under GST regime, realtors see lesser tax burden on raw materials such as cement and steel. This will result in lower construction costs for developers.
The stakeholders are hoping for a positive impact of GST with no high fixed percentage tax which could boost the real estate market.
However, having said this, it is pertinent to mention here that the direct impact of GST on real estate will depend on whether the final GST rate is more or less than the taxes paid currently. Also, the roll out of the GST will take some more time and it is expected that the NDA governments will take due care of of any problem arising out of its implementation in the initial period; probably till one year.
Buy Unitech Ltd at Rs.6.20, for a short term target of Rs.7.20. The Q1FY17, results of the company would be along the expected lines and the implementation of the GST (whether in its present form or a modified version) is a future event, so not much worry.