Converting black money to white - the easy way
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.”