The question nowadays is – whether demonetization will succeed in curbing usage of black money in real estate transactions?
In my personal opinion, it will not succeed at all provided some other actions are also taken which are suggested in this article.
Even after demonetization, buyer of real estate will be tempted to withdraw money from bank account and to pay nearly 50% purchase price in unaccounted way. Buyer will be tempted to do such a malpractice because, it can save stamp duty and registration fees in this way. On the other hand, seller will also not take any objection to this modus operandi because it will save income tax and VAT/GST by this practice.
So what can be done in this situation to curb usage of black money in real estate transactions?
Answer is – State governments which are empowered to levy stamp duty, should (1) lower the stamp duty rate to nearly half of the present rate and (2) increase the Jantri value (stamp duty value) to nearly double the present value. In this way, state’s revenue from stamp duty will remain at same level and buyer will also pay same amount of stamp duty. At the same time, this initiative will assure curbing the usage of black money as the transaction with double jantri value will assure usage of white money to double extent.
Video in Hindi language of this article is also prepared. Following is the link of same.
CA. Tejas K. Andharia
B. COM, F.C.A., D.I.S.A.(ICAI), D.I.R.M.(ICAI)