Salaried individuals and pensioners receive their entire income in white (i.e., legally declared and taxed). They pay taxes diligently and cannot evade even a single rupee.
However, when it comes to purchasing property, many fail to assess the implications and unknowingly incur losses and face issues.
In numerous cases, builders demand 40% to 50% of the total property value in cash (black money), with the remaining amount shown in official transactions.
For example, suppose a salaried employee wants to buy a flat priced at Rs 1.5 crore. The builder may demand Rs 70 lakh in cash and agree to mention only Rs 80 lakh in the sale deed.
Since there is no alternative, the salaried buyer may withdraw funds from fixed deposits or liquidate mutual funds to arrange the cash.
Consequently, the property gets registered for only Rs 80 lakh. Later, when selling the property at the market value — say Rs 4 crore — the actual profit is Rs 2.5 crore. But as per the registered sale deed, the profit appears to be Rs 3.2 crore.
As a result, the individual must pay 20% capital gains tax on Rs 3.2 crore, not on the actual gain, leading to a significant financial loss. This issue becomes more complex when a buyer during resale in future refuses to pay any part of the amount in black.
A recent case in Hyderabad is an alert. A salaried family withdrew a large sum in cash from their bank accounts to pay a builder. Since the cash withdrawal exceeded permissible limits, the Income Tax Department issued a summons.
When the family explained the purpose, a case was filed against the builder for demanding black money, which is illegal.
Engaging in black transactions — whether in real estate, education, or any other sector — can bring legal and financial troubles to both parties involved.
This is an important awareness message- Salaried individuals should exercise extreme caution and avoid properties that require part-payment in cash.