Budget 2015: How FM Jaitley plans on curbing black money transactions in realty

Finance Minister Arun Jaitley has proposed an overhaul of capital gains taxes to pave the way for the listing of Real Estate Investment Trusts (REITs) in the country, when presenting the government’s full-year budget on Saturday. Moreover, Jaitley signaled the government’s intent to curb generation of black money in real estate. While he proposed amendments in the Income Tax Act prohibiting acceptance or repayment of advance in cash of Rs20,000 or more for any transaction in immovable property, he said penalties of equal amount will be imposed in case of contraventions. In other words, black money reduction efforts will be accelerated. 300 percent penalties will be applied for concealment of taxes and returns will need to declare operation of foreign accounts. Assets located abroad, if located, can results in confiscation of assets at home. This should put the fear of god in Swiss account holders. Jail terms is also being proposed.

[caption id=“attachment_2117851” align=“alignleft” width=“380”]  Reuters[/caption] “In order to curb trade based money laundering, making false declarations/ documents in the transaction of any business relating to Customs (section 132, Customs Act) will be brought under the Prevention of Money Laundering Act as a “predicate offence”,” Jaitley said today. Even a Bill for a comprehensive new law to deal with black money parked abroad is likely to be introduced in the current session. Key features of the new law on black money are – · Evasion of tax in relation to foreign assets to have a punishment of rigorous imprisonment up to 10 years, be non compoundable, have a penalty of 300 % and the offender will not be permitted to approach the Settlement Commission. · Non filing of return/filing of return with inadequate disclosures to have a punishment of rigorous imprisonment upto 7 years. ·Undisclosed income from any foreign assets to be taxable at the maximum marginal rate. · Mandatory filing of return in respect of foreign asset. · Entities, banks, financial institutions including individuals all liable for prosecution and penalty · Concealment of income/evasion of income in relation to a foreign asset to be made a ‘predicate’ offence under PML Act, 2002 · PML Act, 2002 and FEMA to be amended to enable administration of new Act on black money. Also, the Government has proposed the Benami Transactions (Prohibition) Bill to curb domestic black money to be introduced in the current session of Parliament. So in a nutshell, Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh and there  will be prohibition on acceptance or payment of an advance of Rs 20,000 or more in cash for purchase of any immovable property. And lastly, Jaitley stressed on the need  to discourage cash transactions. “Now that a majority of Indians has or can have, a RUPAY debit card. I, therefore, proposes to introduce soon several measures that will incentivize credit or debit card transactions, and disincentivise cash transactions,” he said. However, he did not elaborate on what these incentives are.  Former Finance Minister P Chidambaram had introduced and then later abolished the Banking Cash Transaction Tax.