Legal aspect in dealing property

[venkyn]

Hi,

I am buying a plot of cost Z Lacs. The seller is insisting us to give some X amount in black. All the money that I have raised is from loan against property and currently is in my Saving account.

What happens if I give x amount as cash to seller?
Will IT folks ask me about that x cash.
What should be done in such cases.

Please advise.

-Venkyn

[sudhirts]

My personal opinion (and others might differ). Never deal in black. Pay all in white and ensure peace of mind for lifetime. You might end up spending a couple of lacs more if you are paying by white, but atleast it ensures peace of mind. I have known a few of my friends who went by the wrong route paying by black and had to suffer.

[akula]

1) IT folks might intervene if the X amount is beyond a certain limit. What will you tell them if they ask you how you spent that X amount ?

2) In case you want to sell the plot after some time, you'll have to pay tax on short term or long term gains. To calculate your gains the reference amount will be what you have transacted through white.

I've another related question.

Is it 'legal' to register a plot for say 10 lakhs (govt rate), whose actual cost is 40Lakhs (market rate) ? The banks seems to be okay with this and all the payment is through DD. I guess most of the buyers register the property for less than what they have paid. I just wanted to know if that can cause any issues in future, say when you want to sell, etc.

[sudhirts]

The moment you pay through a bank instrument like DD, cheque etc it autmatically becomes white and you are safe. Although its a common and rampant practice to register with low amount, I am not sure of its legality. Even banks accept the actual selling price and based on that they loan and give the amount directly to the seller through DD, although the registered amount is much less.

[sampreeth]

Let us consider a real case.

BDA sites allotted by Govt for about Rs 125 in 2003.

Govt increased the guidance value for registration to Rs 1000 in 2007. This means according to Govt the appreciation is about 7 times in about 5 years ! Even today one has to pay 1% of the registration value to sub registrar as bribe during registration (if there is other ways of getting registered please let me know)

As we know scams/frauds are in the blood of an individual in this country. By knowing all this truth, if one wants to be loya all the best gentleman.

[reddykcn]

I have few points to add:
1. Paying full market value of the property is only legal and all other modes of payment like: black, cash, DD, registering for less value is illegal.

2. But very few people, particularly in the private transactions within individuals involving agricultural land and revenue sites, BDA sites, illegal transactions are happening and I am not sure if Govt is serious to take action like how our Govt is dealing corruption.

3.If all the transactions are scrutinized, I am sure large percentage of the transactions will come under illegal activity.

[simplycar]

Think this article is related to this discussion. So posting it here:

http://timesofindia.indiatimes.com/indi ... 022411.cms