Despite the Income Tax Act introducing some changes for the realty sector to curb generation of black money, builders continue to ask for cash for property purchases. According to a report in The Economic Times, real estate firms in cities like Ahmedabad and Indore ask for hefty cash cuts in purchases.
“Large property markets, being under the direct glare of authorities, have seen the proportion of cash and instances of deals involving cash going down. However, relatively smaller markets have not seen a decline like this as yet,” said a property broker operating in Jaipur to the newspaper.
In 2015, Section 269SS of the Income Tax Act introduced some changes for the realty sector to curb generation of black money.
According to the Central Board of Direct Taxes (CBDT), any transaction in real estate, including agricultural land, has to be made through account payee cheque or real time gross settlement (RTGS) or electronic funds transfer if the amount is Rs 20,000 or above.
If a transaction is done in cash from 1 June 2015 onwards, then a penalty of an equal amount equal under section 271 D of the Income Tax Act will be imposed on the seller who accepts cash.
The assessment officer of I-T Department will send notices to both the seller and the purchaser. The seller will be asked to pay the penalty of an equal amount if he has accepted cash above Rs 20,000. “We will also ask the source of money with the purchaser,” an I-T officer told ANI.
In January 2019, the Income Tax (I-T) Department sent notices to about 2,000 property sellers who took Rs 5 lakh or above in cash while selling their assets between June 2015 and December 2018, a senior official said on Saturday.
"To start with, we have sent notices to those property buyers and sellers who paid or received Rs 5 lakh and above in cash. Once we settle these cases, we will focus on those violators who had paid or received cash below Rs 5 lakh," the official told the news agency.
Officials in the national capital visited all 21 sub-registrar offices in Delhi in January 2019 and scanned all property registries from 1 June 2015, to December 2018 which showed cash payments of above Rs 20,000. This is the biggest proof of law violation, according to the report.
According to a recent survey conducted by Local Circles, a community platform, after demonetisation, black money continues to dominate the real estate market.
As per the survey conducted, only 33 percent of the respondents said that they did not make any cash payment when questioned how much cash they paid while buying a property. They said they have made full amount by cheque or e-payment. All of the remaining 66 percent said they used cash for the past year to purchase a property. According to the survey, two-thirds of property transactions saw a cash element of 10 percent to 50 percent.
The survey said that a majority of Indians continue to make a significant share of their total annual purchases in cash. Around 40 percent of individuals said that between 5 percent to 25 percent of their expenditure is done in cash, 29 percent said that they paid between 25 percent to 50 percent of their transaction in cash and 27 percent said that they paid cash for almost every product in last year. This, however, continues to improve compared to last year, according to the survey, as more people did a larger number of purchases in cash.
“An important objective of demonetisation was that cash is used lesser for payments and that people be encouraged to pay using non-cash methods, but it seems that cash transaction is not reducing in the Indian economy,” the survey pointed out.
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Updated Date: Nov 26, 2019 11:03:28 IST