All property deals to come under tax Scanner

New Delhi: Under pressure to unearth black money, the Income Tax (I-T) department has decided to review all recent property deals to check for use of cash. The plan is to start the scrutiny from Delhi and the National Capital Region, comprising Gurgaon and Noida, and then turn it into an all-India exercise.
I-T officials, who announced the move on Monday, did not elaborate on the period for which the review would be undertaken. However, indications are that transactions starting in 2010-11 would come under the scanner.
The initiative has been taken by the Central Board of Direct Taxes (CBDT) to unearth black money in property deals which go undetected due to differences in market price and registry rates set by state governments. The use of cash in secondary market transactions is very high though tax officials have also come across several instances even in the sale of property by builders.
It has become commonplace for buyers to under-report the transaction to save on registration cost. For sellers, especially those who do not intend to use the money to buy new property, it means a capital tax burden, which they want to evade.
In fact, the real estate sector has been identified as a key generator of black money in the economy. This is despite the fact that registrars across the country have to report all real estate transactions of Rs 30 lakh or more.
The tax department then uses the software available with it to match the data with the tax returns using the permanent account number (PAN) furnished by taxpayers while registering property. It is unclear if the department plans to match all returns filed by registrars with the PAN numbers available with it. The department has data for 2009-10 with it, while information for 2010-11 will only be available starting August this year.
Officials admitted that the challenge would be to review transactions of less than Rs 30 lakh. The government is likely to depend on developers to track these transactions.
Government is keen to show it is doing its bit to address the concerns. CBDT chairman Sudhir Chandra said the finance ministry has initiated steps to stop roundtripping.
Already, 22 tax havens have been identified by the government and six Tax Information Exchange Agreements have been signed with jurisdictions such as Bahamas, Bermuda, British Virgin Island, Cayman Island and Isle of Man.
At a press conference, Chandra also said the I-T department had cleared a record 85 lakh refunds in 2010-11 to make manpower available to crack down on tax evaders and money launderers.
“In the fiscal ended March 31, we have unearthed more than Rs 30,000 crore undisclosed income,” he said.