Black money haven

HT Estates - - HT­ES­TATES -

grant­ing ad­di­tional FAR,” says a re­al­tor, re­quest­ing anonymity.

Ac­cord­ing to renowned ur­ban plan­ner, MN Buch, “Al­low­ing du­bi­ous con­struc­tion, com­pound­ing of flout­ing of norms, dif­fer­ence in cir­cle rate and mar­ket rate of prop­erty are some of the rea­sons which en­cour­age the cir­cu­la­tion of black money in real es­tate.”

The realty sec­tor con­trib­utes nearly 10% to In­dia’s GDP. Many ex­perts say the black money in­volved in this sec­tor could eas­ily con­trib­ute another 10% to In­dia’s GDP. “The 30% tax on cap­i­tal gains from prop­erty com­pels home­buy­ers and in­vestors to take the black money route. For in­stance, if I buy a flat from a de­vel­oper for 50 lakh and the price ap­pre­ci­ates to 70 lakh in a few years, 20 lakh is the cap­i­tal gain to be taken into ac­count when I sell this flat. I will have to pay 30% the gains I have made to the govern­ment as tax. Be­cause of this, home­buy­ers of­ten ac­cept the sale amount as cash to avoid tax. If this can be ra­tio­nalised to 10% than I think peo­ple will pay tax will­ingly,” says Pawan Ja­suja from Fin­lace Con­sult­ing.

Things will im­prove if the real es­tate reg­u­la­tory bill is passed i n par­lia­ment, say ex­perts. “A reg­u­la­tor in this sec­tor can take sev­eral steps to cleanse the sys­tem. Upload­ing

of all data re­lat­ing to the sale of all types of im­move­able prop­er­ties on de­vel­op­ers’ web­sites on a real-time ba­sis should be made manda­tory. It can also over­see the im­ple­men­ta­tion of build­ing bye-laws and acts,” says Aditya De­wan, a Supreme Court lawyer.

De­vel­op­ers/pro­mot­ers must get the projects ap­proved from the sec­tor reg­u­la­tor who also should de­ter­mine the price bracket. Any­one plan­ning to do oth­er­wise should seek prior ap­proval from the sec­tor reg­u­la­tor, which should per­mit the same only for the spec­i­fied rea­sons, De­wan ad­vises.

Bri­jesh Ku­mar, for­mer sec­re­tary to the Govern­ment of In­dia in the Depart­ment of In­for­ma­tion Tech­nol­ogy, who has also served as chair­man and CEO, Greater Noida In­dus­trial De­vel­op­ment Au­thor­ity, says cir­cu­la­tion of black money is “the fail­ure of

ev­ery­body in­volved in the sys­tem.” He sug­gests that poli­cies be tai­lored to min­imise the cases of un­recorded trans­ac­tions. “Be­sides that, if the cir­cle rate and mar­ket rate should be brought at par and stamp duty is low­ered, there won’t be any in­cen­tive left for peo­ple to un­nec­es­sar­ily hide things. Fur­ther, I sug­gest more open­ness in ap­prov­ing ten­ders so that th­ese in­stances can be curbed.”

A ma­jor­ity of ex­perts are of the view that land trans­ac­tions, al­lot­ment and con­ver­sion from agri­cul­ture to res­i­den­tial or com­mer­cial re­quire huge black money trans­ac­tions. “If land trans­ac­tions can be made trans­par­ent, more than 70% to 80% black money can be stopped at that very point. The oth­ers are smaller cases of black money cir­cu­la­tion,” says Chaman Pan­war, a re­al­tor.

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