Black money while buying a property

[agopal]

Also, if the registration amount is greater than 30 lakhs, then a AIR ( Annual Information Report ) to the Income Tax Dept has to be filed by both seller/buyer and this is also one of the reasons why the seller wants to avoid registration in full.

[nagarjunkatta]

Thanks kbaijuk and agopal for your views.

@kbaijuk: Is Axis bank still giving such split DDs for purchase of site?

And one more doubt: In my situation, my owner already has some loan for his house from SBI. So he is trying to sell his site and repay a part of loan to reduce his burden. In this case, if i pay him by DD/Cheque(all white) and suppose he uses the same amount to repay his SBI home loan, does he need to pay the Capital Gain Tax in this case also?

Your answer is much appreciated bcoz if my owner is not taxed in this case, i can convince him to accept the White amount.

[jackalbda]

Yes, or rather thats what a CA person told me. Capital Gain cannot be used for clearing previous debts in order to save taxes, but only options to save Capital Gain Taxes are...

1.Buy/Construct the first dwelling/house. ( There are debates about its a single house or more allowed, but based on an Allahabad court case, its single house , is what the CA guy told me)
2.Keep it in the capital gains saving schemes like National Road Development Authority bonds or something for 3 years. I think interest rate is not that great.

[nagarjunkatta]

Thanks jackalbda

[msn1270]

kbaijuk, shivali, nagarjunkatta

Split DD options is only for the convenience of the Buyer. He can save some money in the stamp Duties(illegally). Since it is issued in the form of DD or Cheque, it is a transparent mechanism and hence its white money. But this option is not for the seller who wants to evade from the Capital gains Tax. Thats the reason, all sellers wants major part in Hard Cash.

[kbaijuk]

@nagarjunkatta, I heard that split DD system is not available now, still you can check with bank.
@Masn1270, I was before thinking in similar lines that its illegal but later when we see corruption everywhere I feel like why we need to pay so much so that these politicians enjoying with our tax/duty. So now I don’t think saving stamp duty is illegal, it’s a way of saving our hard earned money, this means govt wants only that much duty and govt guidance value is the fair price for that area. Govt actually saying us that we need only this much tax and we will provide you only this much facilities. If Govt really wants more duty then they can periodically review guidance value and can be adjusted with market value, they have all systems/people available to do that. So if govt is not doing then why should we?

[bboy]

@kbaijuk, this is the exact thinking of all anti-corruption crusaders! We are all against black money and corruption as long as others are doing it and we don't have a chance to indulge in all those. Our perceptions change and we invent all sorts of innovative excuses the moment we smell blood! You may interpret the law whichever way you want, but it is still illegal and unethical.

Sure, the government does revise the guidance values periodically, but can't keep up with the real market prices for various reasons including corruption! And does the government want you to show only the guidance value? No, the guidance value is the minimum price at which one has to register even if the actual transaction is for a lower price! The law clearly says that the registration price shall be the HIGHER of either the actual sale price or the guidance value. So, there is no room to blame the government.

However, I sympathise with you because it is pretty hard to find a buyer or seller who is willing to deal 100% above the table. Black money has become a status symbol in the society so much so that I have seen people dealing in it and boasting about it when they really didn't have any need for it! In the end, it is up to the moral, ethical, and legal convictions of the individual doing the transaction to decide which path to take.

Good luck!

[rkrishna]

After hunting around for 'suitable site' for many months in a row, I was fortunate to get a buyer who was willing to deal in majority white since he himself was planning to buy another property. To be fair, I did find 3-4 such sellers in 4-5 months. Granted- one needs loads of patience and luck!

I registered the property at almost 3 times the guidance value and encountered many who were curious on why I was 'wasting money'. There is certainly a price to be paid for being honest as every add on expense such as khata transfer fees and 'unofficial charges' go up as the registration value goes up.

[shivali]

rkrishna,

If you get to know any such seller, let me know.

Thanks

[rangavittala]

a public sector banks gives 2 or 3 DD's, first DD for govt value with vendor name and ac no, and
subsequent DD's only Vendor name without ac no, hence vendor can discount DD easily.