By Dr Sanjay Chaturvedi, LLB, PhD
Cash in real estate transactions above Rs 1 crore was almost unthinkable. Real Estate industry is biggest consumer of Black Money. Transactions without cash in real estate cannot be completed. This was known to the government and revenue officers hence time and again government came with rules to curb the black money. Transaction valued at Circle Rates or Jantri or Ready Reckoner rate was the first step to curb black money. Section 50 C was introduced in Income Tax which have specifically provided to value accordingly and even if agreement value is lesser than Stamp Duty Ready Reckoner then also Stamp Duty is payable at Reckoner value and all capital gain taxes also to be calculated accordingly.
To curb the black money, government had recently enacted new Benami Property Act. This act will curb the unknown and bogus name transactions in real estate.
Everyone knows and its is very well known secret of real estate industry that a Builder has to pay bribe, sometime, to get NOCs and permissions to construct real estate projects. These bribe although not allowable deduction as “Bribe” but one can claim as “Speed Money” or “Liasoning Fees”. These fees are always paid in cash. Be it local MLA, or municipal corporator or sometimes local police chowckys.
The customer also insist to take Cash in the transaction leaving builder with no option but to accept Cash. Thousand of crores will be of no use from today morning as cash rich Real Estate Industry crashed overnight. The blackmoney to complete projects became void and of no use after the introduction of new currency notes.