Investing in real estate

Updated: Feb 2 2006, 05:30am hrs
The article on investments in real estate by E Jayashree Kurup (‘Building investments’, India Inc Jan 21) was very informative. She has, however, missed a vital point. Under Section 80(1)(B) of the Income Tax Act, the income of the developer of large residential projects is free from income tax. So, the returns are magnified.

The other point which can be considered for comment is that investments in real estate are for a limited period. It is not like other businesses where you get stuck for life. But, it is not like shares and securities which are readily cashable. The nature of the business is such that there is a lot of cash fluidity and the absolute period in which the investment in land cannot be vacated is about two to three years. That is the time taken in preparing and getting the plan sanctioned and starting construction.
Thereafter, the investment is not needed for completing construction. It accrues from advances from the flat purchasers. Bank loans are also available for construction. When the business of real estate development is combined with other businesses, there is a lot of cash fluidity in the hands of the businessmen. This point can be amplified by various calculations of investment and return etc.
Shyamanand Jalan


Discipline
On Republic Day eve, President APJ Abdul Kalam gave us the twin mantras, of progress and its protection. I agree with him, in toto, when he advocates compulsory NCC training for a minimum period of 18 months. Only this can give the nation disciplined politics, disciplined business, disciplined bureaucracy, scientific pursuits, sports and games.
Thus, politicians and bureaucrats will work only in national interest. Also, a scientific and technological approach is a must for the sake of nation-building.
Hansraj Bhat