Under pressure to unearth black money, the Income Tax department has decided to review all recent property deals to check for use of cash. The plan is to start the scrutiny from Delhi and the National Capital Region, comprising Gurgaon and Noida, and subsequently turn it into an all-India exercise.
“I-T department will review the property deals in Delhi and take action in appropriate cases,” Central Board of Direct Taxes chairman Sudhir Chandra told reporters here, adding that these reviews will include both individual and corporates property deals in Delhi and the National Capital Region (NCR – Noida, Gurgaon).
Officials in the tax department, who announced the move on Monday, did not elaborate on the period for which the review would be undertaken. However, indications are that transactions starting in 2010-11 would come under the scanner.
Aim of the move is to unearth black money in property deals which largely going undetected due to differences in market price and registry rates set by state governments.
The move is based on past searches and surveys conducted by the department that saw maximum undisclosed income by real estate companies. In the last three years, the income tax department conducted several search operations across the country in real estate companies, including the Lodha group, BPTP, Kanakia Group, Paras and Amrapali group, among others on charges of alleged tax evasion or misreporting of income. In fact, according to reports prepared by the intelligence department of the finance ministry, the quantum of unaccounted money is highest in the real estate sector, around Rs 2,000 crore as per a 2009 report. The department’s move is also likely to bring the DDA Housing Scheme 2010 under its scanner. All deals under the scheme would be scrutinised by the I-T department.
The use of cash in secondary market transactions is very high though tax officials have also come across several instances even in the sale of property by builders. It has become commonplace for buyers to under-report the transaction to save on registration cost. For sellers, especially those who do not intend to use the money to buy new property, it means a capital tax burden, which they want to evade.
In fact, the real estate sector has been identified as a key generator of black money in the economy. This is despite the fact that registrars across the country have to report all real estate transactions of Rs 30 lakh or more. The tax department then uses the software available with it to match the data with the tax returns using the permanent account number (PAN) furnished by taxpayers while registering property. It is unclear if the department plans to match all returns filed by registrars with the PAN numbers available with it.
At present, the department has data for 2009-10 available with it, while information for 2010-11 will only be available starting August this year.
Officials admitted that the challenge would be to review transactions of less than Rs 30 lakh. The government is likely to depend on developers to track these transactions.
Bidupadhyay is very right in eulogising the epitome of honesty Shri Aggarwal as well as in criticizing the policy reported. The old Delhi residents do remember that Shri Aggarwal was a terror as head of the office of IAC Acquisition like Mr. Bokolia, another terror, in the late seventies and early eighties. That is why Shri Aggarwal must remember how ordinary middle class people have to struggle to acquire land or a flat and then try to sell some building or plot and how they are forced to pay or accept black money by the builder lobby who even kill people at pleasure if their terms are not accepted. Mr. Aggarwal must be remembering his days as the only honest soldier against the corrupt builders and the land mafia in those days as a result of which false cases were foisted on him by the CBI and he had to suffer for years until rewarded for his integrity by the FM by making him permanent Chairman for two years. Now Mr. Aggarwal alone can come to the rescue of the middle class who are forced to pay bribes to the DDA, the MCD, the Police, the Income Tax office, the private electricity supplier companies and everybody. If this policy is pursued, then generations of lower income group and ordinary middle class will never get a house or a roof over their heads and will be destroyed under the corrupt pressure of a very ruthless system which cares only for the rich.
The CBDT under the courageous chairmanship of an unquestionably clean and spotlessly honest person like Mr. Sudhir Chandra Aggarwal has taken a rather anti-middle class decision to proceed against all those persons selling their lands for Ras. 29 lakhs and less. Of course, with his unblemished record as the IAC (Acquisition) in Delhi decades ago, and his personal hands-on experience in this line, the Chairman’s vision may be right but perhaps not practical as the weaker party in all property transaction has to submit to the terms of the person paying for the buy. The buyer (or, even sellers) will never accept any payment beyond Rs. 29 lakhs in cash to avoid the IT scanners. The seller who needs the money or the middle-class buyer purchasing a home must be prepared to accept the terms dictated by the powerful buyers/sellers. The IT Deptt. must begin with its own stable of officers/staff who have acquired properties in the last ten years to know the ground realities. Will the unimpeachably honest Chairman, CBDT have the temerity of touching the politicians/ministers and top bureaucrats? The authorities cannot take any punitive action against the builder-promoter lobbies anywhere in the country since they have politicians of all parties as their partners-in-loot projects. This decision is retrograde and totally counter-productive to the stated govt. policy of encouraging the creation of more dwelling units to solve housing problems. Instead of this anti-people measure, it would be imperative to lower and standardise the stamp duties on transfer of land/immovable properties so as to curb the greed and control of the builders. Else, the CBDT must first take action against its officers and staff taking huge bribes and acquiring properties left and right. The developers, their protector babus/leaders and the police are not afraid of Anna Hazare or RTI or even the CBDT. Shri Sudhir Chandra Aggarwal, the former famous IAC (Acquisition) of Delhi must be aware of all this.