Unpaid property taxes are under careful scrutiny in India as a result of the boom in the real estate market. Cash transactions have also become more popular, making it more difficult for the tax laws to be enforced. Read more about this in the full article from PropertyWire.
Tax authorities in India are examining property transactions following allegations of widespread irregularities amid a boom in the country’s real estate market, it is claimed.
It is thought that those buying properties worth more than R3 million, the point where tax is due, are not filing the amount with their tax returns to avoid registration costs and sellers are trying to avoid paying capital gains tax.
There are reports that cash transactions have become popular making it harder for the taxman to keep track of what is owed and by whom.
‘We will review all property deals to find out whether any black money has changed hands and action will be taken in appropriate cases,’ said the chairman of the Central Board of Direct Taxes, Sudhir Chandra.
He said that his department has been making effective use of new technology, and that the amount of newly reported but previously undisclosed wealth had increased considerably as a result.
Initially the exercise will start in Delhi and the National Capital Region, comprising Gurgaon and Noida, and then will be spread across the rest of India. The department currently has data for 2009/10 and data for 2010’11 will be available by August.
The department has raided the premises of many real estate developers, including the major players, in the past few years after it received many complaints of the involvement of black money in these deals.
Officials said they unearthed black money from most of those who were searched. The review will include both individuals and corporate property dealers. It will also look at sources of funding for developers projects.
Part payments by cash will also come under scrutiny. It is thought that between 40 and 60% of deals are being done in cash to keep any tax due to nil or to a minimum.
The amount of assets seized by the department has more than doubled in the last four years. Its figures show that there were 529 raids on groups in 2006/07, some 454 in 2007/08, 429 in 2008/09 and 409 in 2009/10.
This article was republished with permission from PropertyWire.