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Vijaya Pushkarna
Vijaya Pushkarna

BLACK MONEY

Slash stamp duty to clean up real estate sector: ASSOCHAM

rela-estate-reuters Representative image | Reuters

Industry body ASSOCHAM has urged the government to slash stamp duty on residential and commercial properties to prevent the use of unaccounted cash in the transactions. A recent joint paper by the ASSOCHAM and Thought Arbitrage found prevalence of rampant black money or ‘untaxed money’ in the real estate business posing a great challenge for the construction industry.

A press release issued by ASSOCHAM said slashed duty would save the real estate and construction industry from turning into parking lot for dubious deals. This, they pointed out, would make buyers of properties the biggest beneficiaries.

The government move against black money and corruption can also be an opportunity to clean up different sectors of the economy, which have been suffering on account of it.

“One of the biggest reasons for the cash forming 30-40 per cent of the real estate transactions is the high level of stamp duty.  With 6-7 per cent stamp duty, purchaser of a flat worth Rs 1-1.50 crore will have to shell out different government levies and other charges like registration, lawyers’ fee to the extent of Rs 10 lakh or so. For a middle class family, which depends largely on borrowed money, this is a huge amount,” said D.S.Rawat, secretary general of ASSOCHAM.

The  registration value determines the capital gains tax for the sellers. With both these levies accounting for significant amount, there is a big incentives for the buyers and sellers to show the registration amount as much lower than the real transaction value, the chamber said. People end up converting white money into black because of this.

Lower stamp duty would also revive the demand in the highly suppressed sector. ““The cleanup will take place with lower duties, ease of doing business in terms of clear land titles by the state regulatory agencies and other clearances being made transparent. It cannot be one –way street where the builders are expected to grease the palm of the corrupt officials and others while they are then expected to do every other transactions by cheques. Hopefully with the new model law in place, things should improve,” the chamber said. Builders or contractors are often compelled to pay large sums of money as bribes to government officials, surveyors, engineers etc to speed up sanctions, and a part of this burden is passed on to the buyer.

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Topics : #ASSOCHAM

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