CASH TRANSACTIONS UNDER LENS
If you have to made part payment In cash while buying a property, to lower stamp duty, you may have some answering to do to the income-tax department. Conversely, if you sold a property, but did not disclose the amount received in cash to evade taxes, you are likely to come under scrutiny.
|There are no officials figures available but it is believed that that real estate sector accounts for a third of India’s thriving black economy, New projects are also under watch. the tax dept had come across thousand of instances where builders accepted significant payments in-cash to evade taxes.|
Armed with data on real estate market rates across the country, the income tax department is keeping an eagle eye on property transactions, one of the biggest sources of black money in India. The I-T department, said sources, was matching data of “declared value” of property — from the registrar of properties — with “market rates” obtained from private consultancies.
So, if you have made part payment in cash to lower stamp duty, you may have some answering to do. Conversely, if you sold a house but did not disclose the amount received in cash to evade taxes, you are likely to come under scrutiny.
Tax officials had detected a large number of deals where the property values had been “under-reported” with wide disparity between the declared and market rates, sources said.
The exercise to collate data on property deals began in June 2014, shortly after the government formed a special investigation team (SIT) to look into cases of black economy. There are no official figures available, but it is believed that the real estate sector accounts for a third of India’s thriving black economy.
New projects are also under watch. The tax department had come across thousands of instances where builders accepted significant portion of the payment in cash to evade taxes, source said.
“There have been instances where many builders are underreporting payments in their accounts, though the market values of apartments are higher than what their books show,” a source said. Black money transactions are rampant in realty deals in India, with most sellers accepting only the value as indicated by the circle rate as the “white” component — paid through instruments such as cheque, demand draft or banking channels. The balance is paid in “black”, or “cash”, to evade taxes.
Stamp duty and registration charges are paid only on the declared value of the property or portion paid through banking channels.
The Central Board of Direct Taxes (CBDT) had ordered that all details of under-reported property deals be shared with the stamp duty authorities, sources said.
“The CBDT has already issued directions to all the field formations for sharing such instances of under reporting of sale proceeds of properties detected by concerned chief commissioner of income tax/director general of income tax with the inspector general (registration & stamps),” said a document accessed by HT.
The SIT has made a case for regulating real estate transactions, with some members suggesting all deals be done online and payments allowed through banks only.
Courtesy hindustan times