Con­vert­ing black money to white - the easy way

HT Estates - - NEWS -

Ex­ploit­ing le­gal loop­holes to con­vert black money to white in Delhi through agri­cul­tural land sale is com­mon for a num­ber of rea­sons – first, the cir­cle rate for agri­cul­ture land is very low as com­pared to the mar­ket price and sec­ond, there is no cap­i­tal gains tax on the earn­ings from land sale.

“Sup­pose some­one has ₹ 100 crore in cash from a source that’s not ac­counted for and he wants to con­vert it to white money, the only way to do it is through salepur­chase of agri­cul­ture land. First, he will buy agri­cul­ture land pay­ing more in cash and less in white through cheque be­cause of low cir­cle rates. Later on, he can sell this land to some­one who is will­ing to pay the full amount at the mar­ket rate in white through cheque. The earn­ing will not be taxed be­cause there is no tax on cap­i­tal gains on agri­cul­ture land. So, all the money earned is white and le­gal,” says Neeraj Ku­mar Singh, a char­tered ac­coun­tant.

Find­ing buy­ers who can pay large sums for prop­erty in white can also be dif­fi­cult. Roshan Singh has a rel­a­tive who wants to sell a farm­house at a throw­away price but no one is ready to buy and pay through cheque. “At present the mar­ket price of the farm­house is around ₹ 100 crore but since my rel­a­tives are an old cou­ple, they don’t want to keep huge sums of cash with them­selves and so want all the money in white. They have brought down the price to ₹ 60cr but have still not found buy­ers will­ing to pay through cheques,” says Singh.

Jas­bir Singh Mal­lik, a Supreme Court lawyer, says “Cap­i­tal gains tax should be im­posed on the earn­ing that comes from the sale of agri­cul­ture land. The Gov­ern­ment can dif­fer­en­ti­ate be­tween a farmer and land deal­ers. Farmers can be ex­empted but peo­ple who buy agri­cul­ture land for the pur­pose of land trad­ing should be brought un­der the purview of cap­i­tal gains tax.”


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