Rajesh Ramnani
The Newly Elected Central Government’s Surgical Strikes On Black Money In The Real Estate Sector
The newly elected government is now in the mood for a Surgical strike even in the Real Estate Sector. The Real Estate sector which is already in a bearish mood since 2014 and has seen a fall of 20% to 35% since then is expected to slow down further if the new scheme is implemented although in the Long run , this move is expected to give a boost to the economy .
According to the top sources, the Central Government is planning to implement the Demat Account Scheme for buying and selling of Immovable Property(ies) including flats, shops and godowns. All the Immovable Property(ies) owned by a person or an entity will be recorded in the Demat Account just the way the shares are kept in a Dematerialised form and the Demat Account records the holdings of the person/entity across all the Companies . The shares of Listed and Public Limited Companies can be sold/purchased only when they are kept in Dematerialised form and in the same way , it is expected that sale/purchase of Immovable Property(ies) will be possible only when they are held in Dematerialised form and the said transaction(s) would be routed through proper Banking Channel.
A person who holds a Demat Account , his complete detail of shareholding across all the Company(ies) are reflected in the said account For example Mr. Amit holds 200 shares of Nestle India Limited , 250 shares of NIIT Limited and 50 shares of Hero Motocorp Limited and if he sells 50 shares of Nestle India Limited ,his Demat Account would reflect his revised shareholding in Nestle India Limited as 150 shares . In the same manner , the detail of all the Immovable Property(ies) held by a person would be reflected in his/her Demat Account. Just as in the example given above , Mr. Amit apart from owning a Residential property in Noida owns a land in Faridabad and a godown in Bhopal , all the detail of the Immovable property(ies ) held by him would be recorded in the Demat Account . If per chance , he owns an Immovable Property , the detail of which is not mentioned in the Demat Account, he would not be able to sell the same and the said property would be deemed illegal . It is expected that the new Regulation would also have the provision that if a person does not do any construction on a vacant piece of Land , then he would be subjected to some penal provision(s) .
Land may be a State subject but the Transfer of Property Act and the Indian Contract Act are the subject of the Central Government . The Central Government is taking a lead in creating a Dematerialised record of the Immovable property(ies) and this move is expected to earn revenues in the long run as clear land titles would boost economic growth but in the short run the possibility of a slowdown in the Real Estate cannot be ruled out as the newly elected government is considering to implement this law soon.
Interesting article. What about if a person holds property (ies) with various partners.
Govt. को बिना देरी किये जल्द से जल्द ये करना चाहिए,,
If so, then It’s highly an impracticable idea of the Government.
In india most properties are litigated
Agricultural properties are being notified under development authoririties for various uses as per master plans
There may be properties land and built up where title is disputed for more than 100 years
I do not understand the purpose of demat
As it is there is huge confusion where circle rates are much higher than actual market rates income tax gst and revenue depots are breathing down the neck of both buyers and seller of property
With total disregard to valuation of litigated property
Also rent control act properties are beyond any reasonable valuation
What is the value of a large property in heart of the town getting rent of 100/- pm
These problems need to be addressed first before rushing into some dematt reform
Fantastic idea, that is why the rulers of Nation should always think for its growth and not for their growth. That’s our PM.
My thoughts:
It is better to introduce blockchain technology before digitalising all the records, because blockchain technology is to store the digitalised documents in an electronic format and there is an option for digital signature. All the deeds, agreements, contracts etc can be stored in digitalised compartments. Then this digitalization move will not only take the legal system into an other level of introducing the robots in the courts but also bring the robots revolution in the entire country relating to transfer of immovable properties. We have to keep in mind in future that all the data based area like courts legal system, property transaction systems etc., are the first in replacing the humans with robots.
Wow, Good news.
Now housing will be affordable. Accountability of property /assets. Truly Badhe Ache Din are coming. I will be very proud of this government. As I have been saying to all. My vote, my government, my Prime minister.
It is a welcoming move.Now real estate especially flats/ house prices will come down with this move.Now common man also can afford to buy of his choice .More and more reforms of this type is welcomed.
Stamp charges is not an issue,.Sebi is charging tax,stamp charges etc for share transaction already. The same way this also will be charged at applicable rate.TDS also can be charged similarly. This is really mind boggling act to think about. Great move. No real owner will suffer. All property disputes will settle in course of time, through court. Of course courts will have enormous work to handle and considerable number of baddies will he killed.
We are not living in US UK OR EUROPE like countries. This is time and money consuming process. Not useful county like India where in one property like flat or shop 2-3 brothers are partners and land dispute between family members.
First priority should be to digitalize land records.If institutes like Indian army have to produce British era records in Mumbai HC to prove their ownership in Adarsh society case,imagine the resistance babus will apply,to foil govt.plans.
This is the greatest reform of this millennium. We know all black money is still in real estate. Yes Mr Modi will face very stuff resistance by builder lobby, corrupt officers and netas. But this would make property affordable for general public.
This is the greatest and boldest step by Modi government. People are not understanding the implications fully. Digitising land records mandatorily will end most of the corruption.
You can’t take cash.
Can’t buy illegal land.
Modi is infact biggest visionary India has seen in 100 years.
There may be many points which may need revision :
a) what happens to stamp Act, which this be not applicable. If not, Govt. will lose revenue and many development projects will suffer.
b) TDS deducted by purchaser from seller while paying the sale consideration and deposited in PAN a/c.of seller. Would this. be abolished as transaction is already legalised and recorded.
c) Safeguards of recording and auditing correct entries of properties in rightful owners name/demat accounts will have to be ensured to avoid wrong transactions.
It means government wants kill the real estate business which is already bed ridden since 2014.
Excellent move. Same should happen for Gold also. However in property it will be nice if EB and property tax etc. also is trasnferred with this online process. Further where it is jointly owned, it must be like Online joint FD making it easier to manage.
What about if property is owned by 10-12 persons? Will be very tedious job to open demat a/c. Also about properties under litigation and/or owner/ co-owner expired? Unlike shares, no facility for nomination.
Wonderful idea; but poor villagers are going to suffer and the Demat Companies will receive crores of Rupees for maintaining the Account which the poor farmer pays..