By Dr Sanjay Chaturvedi, LLB, PhD
Real Estate heading towards Cash-less transactions. Thanks to Government Policies which has discouraged Cash portion in Real Estate. Many of people ask ” I have paid cash to builder, now builder is defaulting. Once I approach any legal authority for recovery, I may loose my Cash portion because Builder is going to give me back only cheq portion with normal interest.”
Previously, it was allowed to pay any amount in cash. Transfer of Property in fact had provisions of paying only cash to purchase real estate. Later on, provisions changed and even cheque payments were allowed. But Cash payments to builders were never ban.
Now, one cannot pay more than Rs3 lakhs in cash for any transaction whatsoever. But the question remain as to how to recover cash portion. Let us bifurcate cash transaction into two. If you have paid cash from your un accounted money on which tax not paid but before six years and there is no tax assessment going on then you can defiantly ask builder the cash portion paid and you have due receipts or acknowledgements of the cash transactions. On the other hand when you have paid cash and you can justify that it was from savings and tax was paid then you have all legitimate right to recover cash from builder.
Real Estate is heading towards cashless transactions. Majority of builders across the nation have started accepting full white and in cheque payment. Cash portions are been taken only when buyer insist. Housing finance companies are also very comfortable on cash less transaction because value of property enhances on agreement value.
The biggest set back for cash transactions was The Benami Transaction Act was passed recently. Under the Act, cash portion if found with builder then not only buyer of benami property but also a person who possess the proceeds equally culprit and punishable.
Government of India wants the country to transact cash less. To facilitate, almost all states started taking stamp duty and registration charges online. Builders’ started taking full cheque. When 100% profit is exempted from income tax under section 80 IB then who will take cash? In affordable housing where the sale proceeds are below Rs 10 Lakhs, the margins are less, builders wants PMAY and other incentives, cash becomes null in such transactions.
Many chairmen of Housing Finance companies in their annual statements have emphasized that cashless transactions shall make real estate industry most transparent and most formal industry.