Ramesh Chandra (name changed) recently sold his first-floor apartment in a premium location of Jor Bagh in New Delhi. As usual, the deal was worth much more than the official circle rate for the area. But given the government’s hawk eye on black money, Chandra was wary of accepting cash to cover the difference.
He arrived at a happy solution: The apartment buyer is ‘gifting’ him a luxury sedan and two expensive watches, and footing the bill for a foreign holiday for the family.
Chandra’s is not a one-off case, estate agents say: it has become more of a norm than the exception. “A lot of people are opting for this route since they are scared to transact in black money,” said a senior executive of an international property consultant that has facilitated some similar deals.
“Such payments are purely by choice and as per the dealing between the transacting parties,” said Anshuman Magazine, chairman and managing director, CBRE South Asia. “This route definitely helps avoid the risk of black money.”
Such transactions happen in resale of land parcels and independent houses held by individuals, he added.
“Combating the country’s parallel economy has been at the top of the NDA government’s agenda… such deals are a clear indication that there is substance to the government’s belief that a lot of black money is locked in the real estate sector,” a real estate expert said on the condition of anonymity.
“What drives this is the huge gap between market rates and the prevailing circle rates,” said Navin Raheja, realtor and chairman of National Real Estate Development Council. “We have requested the government to look into such deals when they talk of black money in real estate.”
Given the government’s hawk eye on black money, real estate buyers are footing the bill for foreign holidays, apart from giving watches, expensive cars to sellers.