While talking of black money often focus is at money stashed abroad, one must recognize that the biggest source of black money in India is the real estate sector. This fact has been further supported in a survey undertaken by KPMG, a consultancy organization, where a large number of respondents have stated that this is perhaps one sector which promotes large amount of corruption.
One of the main factor which promotes this perception is perhaps involvement of cash transactions in the sector. However several reputed organizations involvement in the sector has brought some transparency to the sector. Tata Housing MD claimed that they do not indulge in any cash transactions. He also stated that after introduction of S 80IB under the Income Tax Act, cash transactions have reduced significantly.
Yet another aspect which enhances black money in the real estate sector is the non-registration of the real-estate deals. One of the major contributing factor towards the same is high Stamp Duty.
Stamp duty is a property tax, to be paid in almost every deal at a prescribed rate on the transaction value or calculations based on circle rate, whichever is higher. It varies from state to state. This particular tax varies from one state to another around 4% in Mumbai, 13% in Kerala, 6% in Haryana and 8% in Uttar Pradesh. Most of the states charge around 6-8%. At present, stamp duty is charged from developers at the time of registering the land and again from consumers during the possession of flats.
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