How you become a loser when you pay in black for your real estate property ?

POSTED BY Jagoinvestor ON June 6, 2013 COMMENTS (250)

Naresh recently visited a new residential project in Pune which was ready for possession. The property cost was in his budget and he was about to finalize the deal. The total cost of property was around Rs 40 lacs. Stamp duty and Registration cost was to be paid separately which would take total cost to around 43 lacs. This was a bit heavy on Naresh pocket, so out of his regular habit, he inquired if there is any trick by which he can save some money on the deal ?

Bought house by paying in black

The builder was quick to give him a great saving advice“Sir , You have to pay 6% stamp duty and 1% registration cost on the agreement price. Which comes to 7% of 40 lacs, thats 2.8 lacs additional, thats the reason the total cost comes around 43 lacs . Now if you want to save money, what you can do is pay some part of the deal in cash to us (means pay in black) and we will reduce the agreement cost by that much, that way – we will also save our tax on the black money part and you will save 7% on that cash amount. Like if you pay us Rs 10 lacs in Cash, then we will make the agreement for Rs 30 lacs only and you will have to pay stamp duty and registration cost on only 30 lacs which will be 2.1 lacs, and it will save you Rs 70,000 without doing anything extra ! . Cool na ! .”

The offer was tempting and Naresh fell for it, how cool is saving Rs 70,000 , all you need to do is pay some part in cash and lower the agreement amount in records. But do you understand, what is your loss in long term because of this kind of deal ? Let me break some hearts today, who have already done this mistake while buying their properties.

Stamp duty and Registration Costs

First understand that stamp duty and registration costs vary from one state to other state. For example – In Maharashtra, its 6% + 1% = 7% in total , so whatever is your total agreement cost , you will have to bear additional 7% on that amount as stamp duty + registration costs. Given the huge amount involved and the financial crunch every buyer faces at the last moment of the deal and hunger of builders to save every bit of tax, makes sure that buyers fall for this trick of paying huge amount in CASH (black money) and register the property at lower price just for few thousands (actually sizable if you look at it). This looks like win-win situation to buyers and they are pretty happy about it, however truly speaking, this is a loosing deal for the buyers in a very long run (if you are going to sell the property later) and only benefits the builders and let me now explain you why is it so ?

At the time of selling – The cost of house matters

I hope you are very clear that when you sell your property in future , you pay the tax on the profits made. And the profit is decided by your COST of the house and the sell price. So lower the cost of your house, the higher the profits on paper for you in future. You might be aware of the fact that indexation is applied in case of real estate transactions and 20% tax is paid on the profit.

Now lets take this same example we are discussing and see how much you save at the time of purchase and how much you loose at the time of selling , which can be in distant future. See the working below and try to understand the whole situation

How paying black money in real estate transaction can lead to loss in long term

In the example above you can clearly see that by paying Rs 10 lacs in cash, a person is able to save Rs 70,000 instantly. However they are not able to look beyond the obvious and visualize the kind of loss they will incur in future when they decide to sell the property. The same person will pay 3.4 lacs of additional tax in future because he/she paid Rs 10 lacs in cash years back.

Now there are few points which can be debated here like there can be changes in laws in future, or one can save the tax by investing in another real estate properties (which again depends on future laws) , but the point here is to educate you on the long term implications    of this. Now if you fully understand the message of this post, you can take your decisions with full responsibility.

Whats your take on this ?

250 replies on this article “How you become a loser when you pay in black for your real estate property ?”

  1. NIKHIL says:


    1. Jagoinvestor says:

      That will depend on case to case basis .. but overall I would say option in which you dont pay black money is more profitable for you (but in future)


  2. Muksh says:

    Hi Manish,

    Can I complain about a builder somewhere they are taking black money? If yes then what will happen with the person who bought the property?

    Both will be punished for the same or not?


    1. Jagoinvestor says:


      The moment its in open that there was a black transactions, now its WHITE 🙂 .. So there will be investigation and tax will have to be paid. In blank only the exchange is made in CASH .. that’s just a medium of exchange.. One can also pay in cash and have everything documented and tax can be paid.

      So its not CASH, but hiding of cash which is the issue.

      The tax will have to be paid by builder .. and the payer also have to give a proof that tax has been paid by him on the money


  3. Rajan says:

    Hi Manish
    1. Recently I sold an apartment and I would like to invest the capital gains.

    2. I have a sale deed being done from a builder from whom I am buying an apartment under construction. I had the sale agreement for about 55 lacs and the builder wants to show the sale deed for about 30 lacs as per guidance value. The total cost in sale agreement is given in white only. .
    Will my capital gains tax be calculated by taking the sale deed value or the sale agreement value only??
    3. Also if this new property is being sold after 5 yrs what will be taken as the cost of purchasing– is it sale deed value or sale agreement value of item 2.

    1. It will be taken as per SALE DEED, because sale deed is the proof of purchase.

      Sale agreement is just a PROMISE to SELL , does not mean much !

  4. mahender says:

    sir, it is my suggestion that govt should reduce stamp duty instead of circle rate

  5. MayankUpadhayay says:

    Manish following you for quite some time. Doubts regarding the article 1 What if reselling the property at again lesser than 1 crore price to repeat buying cycle while selling 2. EMI initially is on interest portion then max deduction is of 2 lakh under 80ee, increase in buying cost increase in interest portion beyond 2 lakh exemption limit which is loss what your take on this?

    1. Hi MayankUpadhayay

      I am not clear on what is your question. Please repeat it with more clarity


  6. Babul says:

    Jantri value in some states does not reflect the true cost of property. It usually is much lower than it’s real value.

    Is it wise to force the seller to transact only in ‘white’ money even if the cost of property goes above the Jantri value?

    1. No one can force anyone for anything.

  7. sanjay says:

    Sir, Please guide. As its the matter of My whole life ka kamai.
    What precautions should I take while paying Black Money to the builder, as I wont be having any proof of the black money paid.


    1. There cant be any proof of black money, you will give it in cash and thats all . But dont worry, there should not be any issues as such for real estate transaction!

      1. sanjay says:

        Thanks a lot sir for your quick response.

        The Building is ready to stay. and builder said they are waiting for the OC which they said will come any time in couple of weeks time. He said to give booking cheque of 1 Lack which he will only deposit after obtaining OC and before increasing the ‘After OC Rate’! my worry is he is not depositing the token/booking cheque now & asking to pay blk cash.
        Is thr some way where I can have proof of the money I gave in any way? Please help.

        1. Sanjay

          You cant have proof. Because if there is proof, then its not black, and builder wants it in black. Black money means money which does not have record


  8. alia says:

    Having a flat of 500L worth market value / regd value. I wanted to sell that flat but the highest value I am offered is only 400L because the building is 75yrs old and damaged.
    So what to do now, will I have to pay tax in the difference value or on the amount of 400L only.If so paid will it lead to problems in future.

    1. You need to pay tax only on your profit part !

  9. DHIRAJ says:


    What to do when the builder is not ready to accept cheques for the full amount of the property and not ready to make sale deed to the full amount of deal.

    1. You cant do much other than not dealing with him.

      1. dhiraj says:

        But it is the practice in Gujarat. 50-50, white and black. Is there any law enforcement or anything that can better of the situation.

  10. Sumita says:

    Dear Manish Chauhan ,

    I have question , hope i will get your expert advice please ..
    1. Can buyer do register conveyance deed of a plot at more price than the circle rate prescribed in govt books ?
    2. Suppose the circle rate is 1000 rs per meter and the market rate is 3000 rs per square meter ,can the seller accepts the market rate i.e 3000 rs per square meter in their capital gains account by cheque or demand draft as white money ?
    3. Can you please share the details related to this property law online ?
    with warm regards
    Ms. Sumita

    1. I am not sure of the answers here !

      1. Sumita says:

        pls consult with your expert circle , waiting for your reply , thanks .

  11. Dipti says:

    the stamp duty paid should also be included in the cost of the house.

    1. But it does not work that way !

  12. Keyur says:

    What is the minimum token amount required for a buyer to pay while buying a house in Mumbai. have heard that a token amount of minimum 20% should be paid or else the MOU is considered fake. This is done to save innocent sellers from big fraud builders to stuck someones property.. Is that true???

    Please help

    1. I dont have an idea on this, But yes the token amount would be a good % like 15-20% atleast !

  13. Yash says:

    Hi Manish,

    If am buying a flat in Maharashtra and the total cost of the flat is 65,50000/-. Here i have two options –
    1. I do registration on total cost of 65,50000. in this case i will also have to pay TDS which is 1%. So now i will have to pay 8% on total cost (6% stamp-duty + 1 Registration and + 1% TDS) = I will have to pay 524000
    2. I do registration on below then 50 lacs, suppose 4950,000 and i pay 16,00,000 in case. So i will have to pay just 7% which is = 3,46500
    I just wanted to know weather is doing right or wrong in this case?
    Also while selling my flat in future can i also demand for cash amount so that i can save on profit tax?
    kindly advise!

    1. You can do that if you want, but it cant be lower than the govt ready reckoner rates ..

  14. vikram says:

    Is there any discount on stamp duty on resale flat

  15. says:

    Hi Manish,

    Your blogs are very helpful. I have a concern to discuss.
    I understand as per the law a builder is not suppose to charge for the parking. But is there any work around. I have recently invested under cons.. and builder has demanded 6L in cash for parking. Though its illegal every builder easily manages to shell the out this money from every owner.
    Will filing a legal complaint help when there is no proof of builder demanding such amount. OR at the time of registration can I fight legally that I should be allotted parking for free. In this case builder will easily get away telling the govt that the parking was allotted on lottery basis and every builder ensures to keep the parking slots a little less than the number of flats.

    Kindly share your opinion

    1. UNless you have any proof, how will you fight for this ? Also if the builder was not going to charge for it, then he must have raised the prices of hte flat itself.

  16. Raj says:

    Hi Manish

    I purchased a flat in pune and registration have been done . took possession also and from last 6 months am staying in the flat

    facing so many problems like no PMC water,security etc…

    but did’t pay the black money to builder yet and given the 3 cheques for the same.

    now he asking me that will deposit the cheque.

    Am ready to pay the amount but once he clear all the problems then only…

    please suggest what should I do now if he deposit the cheque in bank…

    1. You cant do much if he deposits, because if you have issued the cheque, it means you have paid him.

  17. vikas says:

    I have bought under constructed flat in Pune. Price of is 35 lakhs including Service tax, VAT, agreement etc.
    now builder has asked me for 2.5 lakhs in cash for parking space and mseb. i have already paid 1.35 Lakhs to him.

    should i really give him remaining amount? what he can do if i not paid remaining amont? i have not got possession yet?
    what are govt. rules? is everyone paying cash to builder?
    is it compulsory for any builder to provide parking space for every flat owner.

    1. As per supreme court , builder cant charge for the parking space seperately ..

  18. Prashanth says:

    I Want to buy an open plot. The circle rate is Rs 1000/Sq,Yd. However, the market price is 4000/SqYd approx.
    Can I do the registration at the market price itself (the actual amount I will pay) or is there any restriction that I have do the registration as per Circle Rate?

    1. THe rule is that the registration has to be done on atleast circle rate

      1. Shivani says:

        Dear Sir , i have one more question regarding similar case , A 200 square yards plot having circle rate is 12000/- per square yard (in sale deed) and the current market value is 30,000/- per square yard
        I want to sale it in white money only , can i accept whole amount 60 lac rs in white (via cheque/dd/payorder) in my capital gain account ? and is the buyer has to do sale deed registration at the circle rate i.e( 12000/- per square yard or the amount he paid i.e 60 lacs ? pls clarify , thanks in advance ! from Shivani Thakur .

        1. Its better to talk to a real estate consultant on this

  19. Hitesh says:

    the registry amount can be received in parts like cash + Cheque — 50-50%. pls suggest

    1. Hi Hitesh

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them


  20. ncp says:

    kindly help me all..
    In solving my family and site problems, I have agreed to sell my site for 18.00 laks,but the cirlce rates is 22.00 laks. The buyer will register at circle rates and pay me all white money, after registartion , the difference amount of 4.00 laks (22 – 18) is to be returned.. How should i take the money and how should i return the difference amount (thro cash or dd).
    Should i take in writing for the return of money for tax purpose.. have i done a mistake. will i face any taxman problems. Kindly tell me implications of taxation. Fully confused. correct me..

    1. If 22 lacs comes to your account, then it will be your income, I suggest you do it via cheque

      1. NCP says:

        true sir.. but i am supposed to return the difference amount of 4 laks .. should i pay the buyer by cash or cheque. should i taken any proof for filing tax purpose.

  21. Manab says:

    helpful insight . thanks

  22. Devashish says:

    vEry Helpful. Thank you.

  23. farhan says:

    Black money is in India itself why the government want to bring it from swiss bank

    1. Thanks for your comment farhan

  24. rajesh says:

    Vry good blog. However, one, paying in cash can lessen his/her future losses if he/she invests the money saved through paying less stamp duty/charges,which would reimburse to an extent, besides gettin away with from present tensions.

    1. Hi rajesh

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  25. param2u says:

    Very pleased to see this blog from Manish Chauhan.
    I believe in this 101%, as a matter of fact I have purchased agriculture land by paying complete cheque payments and not a single rupee in cash,.The problem i faced was that I ended up paying more than circle rate in stamp duties, as the circle rate is usually quite less than the market price in terms of agriculture land.Nevertheless i still went ahead and did a complete white transaction. This has given me peace of mind, I suggest everyone try and do a full cheque deal.Not only is this the law, it also avoids lot of social evils related to black money and one contributes towards the development of their state and Country.

    1. Hey param

      Thanks for sharing your experience with all of us. It was a great learning.


    2. Sanjeev says:

      I totally agree. It’s tempting to avoid tax, but you have to face yourself at the end of it, even if no one else finds out.

    3. Sanjeev says:

      I totally agree. We cannot grumble about poor services if we do not pay for them especially when it comes to large significant amounts such as these. No one may find out that you avoided tax, but you have to face yourself after all. We have just purchased an apartment and paid everything by cheque.

  26. Shyam says:

    Appreciate your guts in addressing such a controversial issue. I’m adding my take here, hoping it helps further brainstorming within the community –
    – Individual-Individual sales: You are in control of everything. All you have to do is convince the other side to “Not be so greedy, Not cheat OUR government”. It may eat a little into your profits, but easy. If you are talking about this case, consider the case closed (at least from my end).
    – Individual-Corp sales: By Corp, I mean all the builders, developers, buyers/sellers who deal with real estate for life. Individual has enough power pick the right Corp/Property for business, but has less to no power on HOW part of business. This is a BIG case of interest for the Govt as well (Manmohan estimated that this is accounting for big portion of total-daily-transations-in-india, tried fixing it albeit not fully). It’d be interesting to see initiatives on incentivizing Corps for following and cultivating transparency (to govt) in business. I would love to see your thoughts, than the empty ‘Thank you’ messages.

    1. Hi Shyam

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  27. rsb says:

    In fact investing in property is not worth the pain anymore. If it is a built up property then property taxes, maintenance and repairs are a net loss. The rent earned/saved is far less than the interest a bank would give. Besides having to bribe the government officials and service charges of lawyers/others it only adds to the overall cost of owning and selling property.

    Empty land if located in a good area risks being encroached on or the owners being bullied to sell it off. This again results in a loss to the owner. And finally getting a buyer for the so called market value is a rare case. Some buyers just pay some advance and lock down the owner from selling to anyone else.

    1. Hey rsb

      Thanks for sharing your experience with all of us. It was a great learning.


  28. Pramos says:

    Hi Manish,
    My friend has 10 lacks rupees in cash out of it 6 lacs is in FD on which he is getting 6000 rupees interest monthly . Now he planning to buy a flat which is cost around 24 lacs without stamp duty and registration. Which will be a good option for him,
    1. Keep FD active and get full amount home loan
    2. Break the FD and pay 10lacs in black or white and take home loan for remaining amount

    1. If he can afford the EMI , i suggest that he takes loan !

  29. faruk says:

    Why shall i will take white when I sale in future I will show value 70 L and will take 20 Cash ?
    2ND 98% builders,resalers ask cash >40% only Jantri is white no other option …

    Good to Talk and good on paper but not practical every where

      1. faruk says:

        Welcome Manish – Keep sharing –

        Hope you understand challanges for Middle class looking to buy homes…

        Good keep sharing


  30. Vishal Kumar says:

    The people who do not have any cash in hand are facing tough time for buying a house due to cash component.

    1. Hi Vishal Kumar

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  31. Prasanna says:

    Anyone know how to stop this! Boycott the purchase…. impossible! Best thing is to track the purchaser’s transactions. I am sure he/she would have withdrawn large amount of money to give it cash… take this into account along with the loan gotten. If the discrepancy is found then don’t harass the buyer, but grill the seller.

    1. Hey Prasanna

      Thanks for sharing your experience with all of us. It was a great learning.


  32. bharat says:

    Thanks Manish ………

  33. bharat says:

    And is there any risk to register below the circle rate ?

    1. What will you get by registering below the circle rate ?

    2. paramvir says:

      hi if anyone registers below circle rate it is illegal according to Indian stamp Act and you will be prosecuted under sections 47-A (1 to 4) , you mightbe kevied a fine upto 10 times the stamp value and not to forget sleepless nights fighting a legal case and also will not be able to sell that property untill the case is settled. I speak this from experience in handling under-valued property related cases. Good luck

  34. bharat says:

    Than how can I show 10 lacs legally. or I have to register it on circle rate but show only 6 lacs legally means I show that I buy property in 6 lacs . but I pay the stamp duty etc on 16 lacs.

    1. Hi bharat

      The question asked by you is beyond our scope. Its suggested that you hire an expert on the issue and pay them for the advice.


  35. bharat says:

    I am buying a property(floor) costs 41 lacs. and I paid 35 lacs in cash contracted on stamp paper.Circle rate is 16 lacs. At the time of registry I will pay 6 lacs in cheque.
    Will I pay registry and stamp duty on 6 lacs or 16 lacs. And if it will pay on 16 lacs then how can I show 10 lacs on the time of registry. Can I show it(10 lacs) cash at time of registry behalf of that byana agreement.

    1. It has to be 16 lacs only . But you you cant show 10 lacs legally because you are not registering it on full value .

  36. Manoj says:

    Hello Manish,
    Your views on this matter please.
    I am an NRI wanting to sell some ancestral property held jointly with resident Indian siblings. We all would like to conduct the entire transaction in cheque, declare income, pay taxes, etc.

    The buyers though insist on registration at circle rate which is 30% lower than the market rate. And, pay 30% in cheque and the remaining 70% in cash.

    Can I show the entire amount (received in cheque+cash) as capital gains?

    Thank you


    1. Manoj

      I think this qualifies for a discussion with a good CA . If you are paying in CASH , then you cant show it legally because there is no proof . If you want, I can connect you to a good CA and you can take it forward with him, he would charge a fees for that!


    2. VinManHBK007 says:

      If this 70% cash is less than 2 lakhs then i think you can get the same deposited in NRO account of yours and show as Indian income and below the annual taxable amount. This can get it converted to white as well. What do you all say ? Am I thinking right ?

  37. laxmi mallick says:

    I payed rs 1o lac to a developer in Navi Mumbai in Cash . The developer give me receipt .

    Is the amount is treated as black money.
    As Mumbai police circular , they honour the receipt of payment

    Laxmi Mallick
    101 Suman Apt,Plot 120 Sector 21, Nerul 400706

    1. Its not treated as black money . Anything you can justify then its not black money . If you cant tell them how you got that money, then its BLANK MONEY !


  38. Simant says:

    The article and all the various scenarios presented in the comments seem valid .. but when push comes to shove, in case someone is offering the same deal in both – completely white & white with black component – which one would you go for ?

    I am a salaried guy with complete white liquidity so I would go for the 100% white situation .. would love to hear what others have to say.


    1. Hi Simant

      I am not sure what is your question here .. if you can pay full 100% in white , its better you do that !

  39. antony says:

    The black money situation is very bad in India. Govt claims they will bring back black money from foreign bank accounts, but in reality 1000 times that amount of black money exists here in India itself. All the black money is going into real estate.

    The rich land owners/builder demand almonst 40% to 50% in cash; otherwise, they are not willing to sell. The poor middle class pay cash component and make their hard-earned white money black. This benefits the seller/builder and helps him avoid capital gains tax. So, rich become richer and poor become poorer

    Govt is simply not interested in tackling black money. They only talk about black money during election time. Govt should reduce capital gains tax to reduce black money circulation.

    1. Thanks for sharing your views .

      In your view, what kind of changes in laws will help ?

  40. antony says:

    As per my experience searching properties to buy in bangalore, 95% sellers want some part to be paid in cash. In bangalore, there is a guidance value fixed by govt for every location. Properties cannot be registered below guidace value. Seller wants to show sale value exactly equal to/slightly above guidance value, and the remaining amount they want cash.

    For example, if guidance value for a particular locality is Rs.1000 per sqft, and market price is Rs.2000 per sqft. Here, if plot measures 1200 sqft, then govt value for plot is Rs.12 lakh. But market price and total transaction value is Rs.24 lakh. So, now seller insists that property be registered for Rs.13 lakh value only, which is rs.1 lakh more than govt guidance value, so legally possible to register. Seller insists that remaining Rs. 11 lakh be paid in cash. And buyer has to pay the 7% registration cost only for Rs.13 lakh. They refuse to register property for whole Rs.24 lakh. They will not sell to you, if you insist on registering for whole amount.

    This is because they want to avoid the 30% capital gains tax on profit from sale. It is the high capital gains tax which is responsible for black money, not the stamp duty/registration cost of 7%.

    The situation is so bad in bangalore that it is impossible to buy property with complete white money. Not all properties will suit your requirement, location, and budget and very few have proper documents, and those that match your requirement, location, and budget and have clear documents will be few only, and those few property sellers inisit on huge black component. So, situation is bleak for those who have white money only.

    But black money has a lot of problems too. If it is white money, you can easily deposit it in bank account and earn meagre interest without fear. But if you have black money, it has to be kept at home, which is a risk, and if there is a IT raid, you will lose all of it and also pay additional penalty.

  41. Fred says:

    Quite informative Manish. I was ignoring most of these things till now. I have a question which might sound a bit silly. What is the best way to get the circle rate in a given city?

    1. Its a bit tough .. you need to search “guidance value for property” + CITY in google .. and then take it from there !

  42. Arpit Kumar says:

    As long as the circle rates in all cities/towns stay SUPER LOW (as they are now), every buyer and seller will try to avoid paying taxes and stamp duties.

    And (in case 2) if you invest the 70000 amount somewhere for 10% (compounded annually), then after 7 years you will make around 340000 [70000 x PVIFA(10%,7 years)]!!! So that will compensate the long term loss of 342000 in case he has to sell the house for full white after 7 years.

  43. sanman says:

    hi, on the other side I have a question. What are the tax implications for the buyer who is investing as white for the registration and stamp duty of the property. For ex, the buyer can’t undervalue the property and has to minimally pay the white part for showing on the govt. registration/records. Whether there will be any issue for this white money in terms of his source of income? How is this taken care by the governance? (does this matter if the investment is huge.. ?)

    1. In future if there is any inquiry from income tax department, then you should be able to prove from where did you bring all the money !

  44. Neel Patel says:

    Hi Manish,

    For example say if I am selling my property at 3 crores, but the seller insists on doing the registration at the circle rate which is 1 crore. So on paper, the property is 1 crore but the market rate and the transaction is @ 3 crore.

    Now there are two situations:
    1. Buyer pays me 1 crore in cheque and 2 crore in cash.
    2. Buyer pays me 3 crore in cheque.

    What would be implications for me and for the buyer in both of the above situations? Can I show entire 3 crore as my capital gains in both the above situations? I want everything in white and want to pay tax, but not finding buyers who wants to pay full white.

    Your views appreciated!

    1. If you register the property at 1 crore and take the money in cash ,then your PROperty cost price is 1 crore, so if you sell the property in 4 crores in next few years, your official profit will be 4-1 = 3 crores and you pay tax on that amount !

    2. Ankur says:

      Hello Neel, Manish

      I am interested to know the outcome of the B option. If he does the registry for 1 crore, but pays the whole 3 Crore in white via the cheque, what happens in that case? any implications for Buyer/Seller?

      1. Jagoinvestor says:

        Why will a seller accept doing registry at lower price when they are taking money in white?

  45. John says:

    Hi Manish,
    Excellent article.
    More than the buyers desire to save reg/stamp charges, its the sellers urge to avoid capital gain taxes that fuels this practice.
    Making sellers aware of Capital Gains Tax saving options(nhai/rec) and making those more attractive could lead to more ‘white’ transaction in future.


    1. yea .. thanks for your comment on this 🙂

  46. Krishna says:

    Let us assume that official price (as per registration department) is Rs. 60,00,000/- at the time of selling. This amount only will be considered for computing capital gains tax even if the white amount is shown as less than Rs. 60,00,000/-. Then, the seller has to pay capital gains tax on Rs.30,00,000/-(if bought in black) instead of on Rs.20,00,000/- (if bought in white). Therefore, what Mr. Manish says may still be valid.

    1. Thanks for your comment Krishna !

  47. Aditya says:

    I understood this verry clearly now but I want to point out that no one would show the value of the property at the actual cost while selling. They themselves would show it valued less. Now its actually 51lakhs, They can show it 42 lakhs…and take the remaining 10lakhs in black the cycle continues..
    Please correct me if I am wrong. Your valued comments are welcome.

    1. Mostly True .. but not for 100% people !

  48. Need help says:

    Any way I can get in touch with you? Need immediate help…thnx

    1. Hi Abhijit

      I just saw this message today . Let me know why its so urgent ?

  49. Need help says:

    Hello guys,
    Nice article Manish & it is helpful to understand BLACK things. I understand 25-30% black is norm these days & I can’t avoid it however with the recent conversation with the developer he is asking to do something very different than above comments/article.

    I have finalized a deal of plot purchase with a developer for 22 Lacs which comes around 1750/SFT and now I have arranged for 25% (5.5 Lacs + Regi) of the down payment & already applied for 75% of home loan & things are positive for the same.

    Eventually I came to know that the current base / govt rate is 1200 & developer wants a SALE DEED at the rate of 700/SFT. Now I think it is a problem….

    Above that he told me that I will receive your 75% home loan amount directly to me & then I will give you a cheque & then you have to come back with the cash for the same amount.

    I am not able to understand what to do on this? Is it a big problem for me? Or it is done normally & is a normal practice? Is it going to be a problem for me?

    The plot is very nice & I liked it a lot & don’t really want to cancel the deal because of this…..your timely advice will be very helpful to me….

    Thanks in advance..

    1. I think becasue the deal is nice, thats the reason he is asking you for unreasonable things . I think putting it on our forum would be a good idea because other more knowedgable people can comment on this –

  50. Abhijit says:

    Hi Manish, thanks for the article.

    Let me have your comments on my case.
    I am about to finalize a deal for plot & home loan has been sanctioned in principle, now my builder has asked something very unusual….he told me that the home loan will be disbuesed in your account & you have to give me that money by cash.

    I haven’t heard anything like this before, I am strictly feeling that I should not do this at all. But how come Bank guys will be okay to disburse the amount to my account?

    Let me know, thnx

    1. Bank will not be OK 🙂 . Tell the builder that he is asking something which is not possible !


  51. Ankit says:

    The problem is that we have to do a part of transaction in cash, Just to give you an example someone purchased a under construction property in CLP mode. And just when he was about to get the possession he decided to sell it off. Now the total amount paid during say 4yrs was 35Lac and current property price is 60 lac. Now the registry will be done on 35 lac then the seller has to accept the remaining 25Lac in cash. Is there a way to get this also in White?
    Second if he accept 60 lac and then buy another property or 2 property with 60Lac then Is he still liable to pay tax?

    1. Ankit

      This can only be agreed between buyer and seller !

  52. abhishek says:

    Hi manish. I need to talk to u urgent for some suggestions. Kindly pass me ur phone no if possible. I have also messaged u on FB. kindly check ur other folder beside the inbox.

  53. SUDHANK says:

    Dear Manish

    We all get involved in Real Sector at least once in a life time and i can bet that no one can say that he/she even know the terminologies used in real estate sector related documents. Its my personal experience in which from the very starting (Token Money) i insisted on transactions through cheque mode only so that i can have some proofs of payment because builder is the last person whom middle class person will trust. but it becomes very difficult for me to find out the property where you can purchase a flat with 100 % white money. Somewhere ratio of black:white was 40:60 somewhere it was 30:70. Builder strictly deny to take black money portion (cash) into white money mode. Irony is that , middle class salaried person arrange down payment money then we convert our hard earned super white money into black money. As few readers told here also jantri rates are applicable so one can not buy that property below applicable jantri rates in that circle.In my case , i increased the paper amount by mentioning extra work of 2 lacs. On stamp duty , extra work amount was not considered. At the time of selling also , there are agents who increased the paper values by some ways i dont know.
    So first thing,
    1. One person want to buy a flat through white money mode only : Very difficult to find out such property / Builder.
    2.) Our hard earned white money get converted into black and we dont get papers of same amount also
    3.) Middle class always remain at receiving end
    4.) Most of Terminologies are still unclear to me

    1. We are coming with an article with most of the terminologies next week . Thanks for sharing your cases !

  54. rohit says:

    if investor has paid stamp duty while buying house from the owner and now he is selling it so does the buyer have to pay stamp duty again

    1. No . He does not have to pay it again to Govt, but when you sell it you will price your flat in such a way that it will cover that , because it was borne by you

  55. Pratik says:

    brilliant article Manish !!

  56. Prateek Pandey says:

    Hi Manish.

    A good insight on the matter and a very practical scenario.
    One things came to my mind after reading this and might have been discussed in the comments above but I would like to mention it again.

    A person can think what If I Invest those 70000 saved?
    Calculating at a rate of 9%(fds etc) and 16%(pure equity) for seven years the amount roughly doubles and triples respectively.
    Still you lag lot behind the difference in the two scenarios.
    So a bad deal to pay in black.

    1. I am not sure what is your conclusion here ?

  57. Vivek says:

    Yes, Very True Manish,

    I am surprised to see you think just like me.

    Many may not agree with me on the above calculation, but an educated person will definitely understand the nuances.

    I appreciate you took time to jot down such beneficial article.

    Hope readers will comprehend the article and use it to their best advantage.

      1. venkat says:

        I have a different calculation. If the 10 lakhs paid in cash is black money then they have already saved 30.9% (which comes to 3.09 lakhs ) of that in not paying income tax. Now after 7 years you are paying 3.5 lakhs extra as capital gains tax. so, it looks like they have deferred their tax due for 7 years.

        I know it all depends on which angle you see it. But just wanted to tell this could also be the case.

        1. Its your view .. if you feel its fine to do this, go ahead 🙂

    1. Jig says:

      What you need to do after education if no one offer a flat/house with pure white money?
      You wont buy house for your family and needs?

      Still Real Estate bill is far away and am sure system is not going to improve even though bill will be there.


      1. Thanks for your views on this !

  58. Ravi says:

    If a buyer pays his white money in cash to builder(for builder it is black) while purchasing property, is there any other loss than what Manish explained while selling?

    any inputs?

    1. Vivek says:

      Yes, if the Registering Authority finds out that you have understated the property value in order to save on Stamp duty, it can penalise you with double the amount of stamp duty.

      Both the parties will also invite wrath of Income Tax Authorities.

      Better be safe than sorry.

  59. vikas says:

    Nice Artical, but as in India 99% deal are done with Black money so multiple ways out.

    Another Aspect of registration is doing under construction house registration
    – Half( some x%) amount is value register with StAMP duty-
    – Half amount or ( some 100-x%) for construction agreement between buyer and builder

    Do we must do registration of construction agreement or not? Can we save money on that registration?

    Also typically house have interior works also of around 10-20% of total value. how do we accommodate that while reselling?

    Can anyone shade light on that?

    1. No you can not accomodate interior work in house while selling . The new buyer might want to redo the things in his own way !

  60. Mukesh says:

    Hi Manish,
    Quick ques – can it be the other way around?
    What if someone wants to register a 40lac home @ 45lac? How does that change the numbers (for ref only)?
    A case in point is if you want more loan from bank, say 90%. But since most banks are paying max 80% as loan, you need to do the agreement at a higher cost to improve upon that. But before that, is that at all possible?


    1. Thanks , thats a good idea 🙂 . But why will builder want to do that ? If he registers the property at higher price, it shows that he has got more income (on papers) , If IT department asks him to pay tax on that amount, what will he do ?

  61. Jig says:

    Earlier during my one of query i asked manish for this concern and he replied it is a system in india.
    Yes It is a system in india and you are also mentioning here the problem not a solution , just like others.
    I am an NRI and didnt want to convert my money into black . When i search the Market for full white payment project in my City ( Surat ) , you will not surprised to hear that no single project . In short, if i have to buy house,residential or commerical property i have to pay minimum 40% in black.

    What you will do in such scnerario? We dont buy house for better living?

    All bakwas, as no one ready to improve system….

    1. Hi Jig

      Thanks for sharing the views . I agree that many times it happens , but there are cases in many cities where one has the option to make the payment in white (read some comments , people have shared it) , but customer themselves want to pay in black , the article is for them .

  62. Mohan says:

    Dear Manish,

    Thanks for such a nice and informative article.

    But , Personally, I think the loss is much more . We all forget the money trial. The Rs. 10 L which you paid in cash finds its way from the builder to politicians/ political parties and then to local mafia to underworld and then on to fund the terrorists and you all know the consequences.
    The Rs. 10 L shall also deprive the exchequer multiple times. The seller who received Rs. 10 L in cash shall keep it in cash form and pay to another seller (of a property or some such high value transaction which is normally taxable) in cash and shall deprive the exchequer a second time and so on and so forth.


    1. Yea . thats a good point . I never thought that way !

    2. Sanjeev says:

      Yes, I totally agree with this. This money remains outside the system, and is used for legal as well as illegal activities easily. That’s the real cost to the country. Thanks for bringing this out so clearly.

  63. Mayank Saxena says:

    Very informative article and a very nice discussion after that.
    A suggestion to improve the forum:
    Many readers who are eager to gain more knowledge would love to read the complete discussion from the top to the end (like me). Now there are many points which are very often repeated. Can you Manishji, highlight questions which you think are necessary and sufficient for a ‘serious reader’? I know you will do a good job of this too.
    Next like in facebook, can I be constantly reminded (in my email) if further ‘highlighted discussions’ are added to this thread.

    1. You mean I should put the top discussion posts sticky ? Or highlight them ?

  64. Suresh says:

    Isn’t there an option to skip the indexation benefit and opt for flat 10% tax? If that is possible, tax will be 10% on 70 lakhs i.e. 7,00,000 in case2.

    1. Yes, you can do that . In this example , 10% is coming lower than 20% I guess

      1. Suresh says:

        Thanx Manish. In that case, showing in black was actually beneficial (not morally though). However, most of the websites quote this option of 10% or 20% (with indexation) only for shares, mutual funds, etc and not for property. Not sure if this option can be availed for property.

  65. geev says:

    You pay cash while buying,you take cash while selling.All this to avoid tax payment.
    The IT department monitors heavy cash transaction,RE registrations by using PAN.Just to save tax you are placing yourself in the path of having to face scrutiny.Passbooks get called by IT people who will check each entry and three years later how much will you remember of the cash movements.Even heavy drawals of cash needs PAN number to be quoted.
    In the ultimate analysis you have to be law abiding and follow laws willingly for the nation to move ahead and we should not be involved in hiding our transactions.No point living a life of fear as to when you will get a call from IT.

    1. Thanks for sharing your views on this topic !

  66. Vikameha252 says:

    Thanks a lot Manish for sharing your knowledge on this topic. Can see some guys using bad words here or there in comments section. Really feel pitty on those who challenge you without giving any base to their explanation. May be they at one hand are gaining knowledge from this site (or may be any other source) and then think they are now the master of the trade. Feel good you handling them well and not amongst them.

    People are just reading your articles and gaining so much information that they could not have got otherwise. Thanks a ton.

    Well, I am quite disappointed with Indian political scenario, the corruption, the rapes, the cricket match fixing, people having no respect for others, the traffic chaos, plenty of infrastructure issues like no abundant light, water and here I am talking about big cities forget about villages. And all this after we pay our hard earned money as income tax which are swallowed in one or other scams. So feel no guilt evading tax on property sell/buy if I get the chance.

    1. Not an issue , I do my job, others do their job 🙂 . thanks for sharing your views and concerns

  67. I firmly believe that if the govt wants to prevent the white money from getting converted into black, they should reduce the Stamp Duty Rate… 7% levy is too high which induces the buyer to pay in cash…

    If this rate i reduced to somewhere around 2-3%, a large chunk of the population will prefer to pay in cheque rather than cash.

    1. Yes, it should be a token amount .

  68. Chetan Ambi says:

    Its good to know the flip side of paying in black for real estate property. Like someone told in the comments section we can invest that 70,000 in some savings which will give returns in 7 years. Anyways txn for this information!!

  69. joseph says:

    In any column or article always there are pros or cons or third angle, But I apreciate Manish Chauhan about his efforts to write on this topic. expert can give their views or comment and then only common man will be benefited from this information. Weldon Manish.

  70. Prasad says:

    This is a beautiful article but Sorry one thing i was not able to understand is:if a person as brought a house like that again wouldn’t he tempted to under value @ the time of sale?

    1. Yes, he is free to do that and it will be a smart enough move from tax saving point of view . The article just makes one aware of the issue involved. One can find out the way out !

  71. WeIndians says:

    we are Indians. We will pay black money to buy for less on paper. We will also sell for far more than on paper and receive black money. Till the time we are able to transact, store and evade using black money, I dont think we will be fair in our transactions.

    1. Yes . I know that 🙂

  72. angan chandra says:

    good article. one thing i want to mention, in Maharashtra stamp duty is not 6%, it is 5% but stamp duty (5%), registration (1%), MVAT (1%). so total comes to 7% tax need to pay by buyer when buying property.

    1. Thanks for sharing that . I was not aware of this much detail 🙂

  73. P says:

    This article completely lacks depth which Jagoinvestors articles are so known for.
    Really poor effort. 🙁

    1. Hi

      Thanks for sharing your view . The depth has to be found by the reader and discussed in comments section. It would be best if you would add few points to the discussion like others 🙂 and make it a complete things . We are a community btw 🙂

  74. CBRCODER says:

    Hi Manish, This time you missed one crucial point. How did 10L cash come from ? If you have that you have saved 3L in taxes (if you are in highest paying bracket) 🙂 . If you compute savings on total of 3.7 lakhs for 7 years you will see the difference.

    Increasingly means of using Cash are getting smaller and smaller. Now you can only use them in Real Estate OR GOLD.

    1. I am not clear on this , can you explain more !

  75. Roshni Desai says:

    Real estate is a seller’s market. All terms & conditions are of the builder. I and my husband recently bought a 2BHK in Mumbai. In our 6 months of property search, we did not find any builder whose offer was completely in white. Else, why have realty prices remained so high despite the recent slowdown.

    1. Thansk for sharing your case. Yes I agree with you , Almost every builder takes some part in Black

  76. Srinivas says:

    Interesting article.

    One has to know the nitty gritty to benefit from a rule or law. Finance (capital gains in this case) is no exception.

    It is a fact that in most parts of india black in real estate is a given. Though in few parts there are ready reckoner prices which are revised periodically, mostly the prevelent prices/government prices are far lower than the actual prevailing prices. This is a reason for black money economy to flurish.

    It is well taken that the buyer looses it she pays in black. Ideally, all payment should be white. But can it be that way all the time? When an individual buyer is against a builder, think who can call the shots. Specifically when it comes to finalising a deal. Add to this, the financial ignorance of general public.

    Now, i want to highlight ways in which this can be managed.

    First, the capital gains difference that is shown in the article is, if the CG is paid at the time of sale. If the same is invested in bonds, the tax component goes down drastically. There are other ways to manage CG from sale of house property.

    No, I am not supporting black money here. But as it is a reality, I feel, one has to understand intricacies and make the most of the situation, legally.

    1. Yes Srinivas . Agree with your points here . thanks for sharing your views on this .

  77. balajikumar mallidi says:

    very useful article. it is a great use to every apartment buyer.

  78. bipa says:

    its really funny to see that in all the comments u c the word “BLACK”..

      1. vrknair says:

        because they love their pocket more than the pocket of the country(treasury)…They do not think of those poor people whom the govt is helping with the subsidies, creating the infrastructures for the development of India, and so many things like this, for which money required which comes through taxes only…No minister brings any money from the dream land’s money tree(PM already told it!)…out of the blue…like a magician.. in short they do not Love India…in short they love only themselves,,not even their children…because India developed means the future of their children also developed..
        Congress or BJP or the third front…they will all come and go but India will remain and India should remain India for us all because it is our beloved motherland (jaan se pyaari-more beloved to us than even our own life)…They all work & serve , at least lip service, for the betterment, development of India and its people.

        1. Thanks for sharing !

        2. anonymous says:

          If people are assured that the paid tax is utilized to build the nation, I m sure noone will hesitate to pay every single penny. but alas, all the tax money is gone into various scams … do not see a single good project running…do not see any scheme that helps business, corporate or agriculture…
          What will general public do :(.

  79. vrknair says:

    Govt should bring down the stamp duty on registration and should publish prices of property in any area which should be updated periodically and if anybody pays below the notified price it should be treated as an offence and should be dealt with according to the law of the land…
    If anybody found allowing to generate black money he should be dealt with according to the law of the land.
    Many of the times we hear people telling that they registered a property costing 30 lakhs for 3 lakhs to save stamp duty…He generated 27 lakh black money which is a dis service to the nation…He is destroying the economy of the nation.

    1. Thansk for sharing your thoughts on this !

    2. smitha says:

      Agree with your views on lowering the registration expenses, which are ridiculously high. Most people prefer to pay their hard-earned white money in black simply to reduce the registration charges. This situation is more prevalent in semi-urban areas where I recently witnessed a transaction in which the official value is shown as 6.75 lakhs even though 28 lakhs has changed hands.

      1. yogesh gandhi says:

        i have a property (market value=20 lacs)
        govt price 4lacs

        can a buyer buy this property from me in 20 lacs white by giving me two cheques of 4 lacs and 16 lacs.

        while registration he shows property price as 4 lacs which is equl to circle rate.

        can i show remaining 16 lacs i got from property sale? or will this income be my unaccounted income.

        one of my friend said that even if buyer is ready to pay in full white, the seller is scared that buyer my sue him for forgery nd selling him the property by quoting hom more thsn govt defined price? can this happen? he said such acase has happened in his neighbor

        if i get a cheque of 20 lacs andthe buyer registers his propertyfor 4 lacs. the account might not tally. what should be done in such a case?

        1. You just have to worry for your case and not the sellers . if you get the 20 lacs cheque then 20 lacs is your income and you pay income tax as per that price, how does it matter, on what price its registered by other party ?

          1. Richa says:

            Dear Manish , Sorry to interrupt you i may be wrong , but it matters to the seller as at the registered time in registration office seller has to furnish an agrrement affidabit with the buyer that he receives the amount 20 lacs not 4 lacs ? please correct me ?
            thanks , Richa

            1. I am not clear on that !

  80. Manish, unfortunately the key driver for all decisions taken today is instant gratification. So many people do NOT think long term, and just focus on the next moment. Of course, am not getting into the aspect of morality here. Having said that, good article. I never thought about this calculation. But I have purchased a flat in Pune in full white, in spite of many close relatives pushing for ‘some’ tax saving. Fortunately, my builder had both options available.

    1. Great 🙂 .. I agree with instant gratification part 🙂

  81. Vaibhav says:

    Hahahaha… poor dumbass author… If he buys in black, won’t he also sell in black?

    1. Definately Vaibhav ! . He will , the article is about showing the possibility not suggesting anything . Thanks for your contribution to article and take time to comment 🙂 . Welcome to this blog

      1. Venki says:

        I don’t think people understand implications of black money. Atlease we have better systems compared to other developing countries. We will see more stronger constitutional bodies in future. Fortunate to be part of Indian society (and culture).

        1. Thanks for your points !

      2. ganesh says:

        who knows .. about the feature regulations.. one cant able to sell in b/w component..?

    2. Abhijeet says:

      @ Vaibhav,

      Author here is talking about proprietary of moral values of an individual,
      & somebody also talked about a word integrity,
      We as a responsible citizen need to step towards sensible acts in our life so that we shall be able to contribute something for better society.

      Have you ever heard those word’s before ?

  82. Wriju Bharadwaj says:

    Hi Manish,

    A very useful piece of information for buyers. But somehow I feel due the prevailing mentality of people and tendency to opt for tax evasion, people will still tend to go for malpractices.

    Thanks for sharing nonetheless.


  83. Chandan Singh Padiyar says:

    It looks like transactions in Black are a Normal for the Society, Infact we should willingly STOP the practice of entering into any Transaction which requires Malpractice, What is the point in gaining some Amount by compromising our Integrity.

  84. Chandrasekaran says:

    By all these comments & Manish article i come to know most of the property dealings & it`s positives & negatives.
    It`s a good communication on real estate dealing, which has in fact many hurdles in practical, not only Black & white but also multi dimensional Human attitude, towards saving & investments.
    Thank you Manish, you are really making us to grow in our knowledge of investment.
    With Regards

    1. Thansk Chandrasekaran

  85. Samir Shah says:

    Hey manish,
    This is really an eye opener for me. As I wasn’t really aware of the tax implications on selling the property.

    Can u suggest a go to blog specifically for property investment? One like jagoinvestor.

    Hats off to you and nandish, you both really changed my vision for finance.

    1. Welcome Samir .. change someone else financial life now !

  86. SIVA says:

    I am skeptical on this because while selling why should I show the original selling price ?

    1. thats your wish 🙂 . You can do whatever you feel will save you money

  87. joseph says:

    In Maharashtra, about stamp duty you are correct. After certain slabs, You have to pay @ 6%. BUT there is correction in registration fee, which is 1 % but maximum upto 30,000/- Rs. only

    1. I didnt knew this .

  88. atul khanna says:

    Generally people who pay some cash to purchase a property also end up selling their property with cash component…

    1. True Atul . However article is just to share what is the possibility . One needs to take their own stand 🙂

  89. Venugopal says:

    Nice article Manish! Almost all people know about cash requirement. Good you added CII to show your point. There is one comment from “Manish” above which is worth including in your article.
    Another point is on the loss already in place by paying 10Lac in cash. Meaning indiviual would have already paid Tax for 10Lac. During the course of this transaction 10Lac of white money gets converted to 10Lacs of black, where the buyer already lost around 3 lacs(depending upon tax slab) paid towards tax.

    1. Yes, some of the readers have included fair points . Let me just relook at them and add them to article

  90. Ramesh says:

    Many of us feel that while selling we can get some part of amount in cash thus avoid the tax on profit, for a builder to do away with black is very easy but it would be very difficult to keep the huge cash in black for a common man like us and spend it without the knowledge of the tax-man. I would still prefer to invest in a new property rather than taking cash in black. This may differ from individual to individual and each one has to have his own thoughts on this and opt for the best.

    1. Thanks for your view on this topic and what you would do !

  91. Sahil says:

    Hello Manish,

    It was a nice article and I got the message, however in practical, there are a lot of buyers who prefer to pay mostly cash and register the property in much lower value than the prevailing market price as a buyer does not want to show his real income (as his sources of income are also from black money) and also Save tax (obvious reason).

    One of my close relative wanted to sell a plot (in White money) and it was very difficult to find a buyer as no one was ready to buy it with total White money. As the appreciation from that property was not good, he had to sell the property at a lower than market price due to this reason (all payments in white) and invest the amount elsewhere.


    1. Thansk for sharing your case Sahil

      Agree with you that reality is very different than the article , but anyways thats the point we want to bring in , atleast people can start thinking !

  92. Amit Sawhney says:

    More importantly, the whole act of paying in black takes away our right to comment on any act of corruption. If we can be corrupt for such a small amount, our politicians’ and bureaucrats’ behavior is just and valid when they act irresponsibly for a larger gain.

    1. sevan says:

      In most of the cases, it is not that we support the Corruption. Here in Bangalore, I can easily claim that it is next to impossible to find a flat which can be fully paid in white. The owner/builder does not accept paying fully in white and will even cancel the deal if insisted on. What is the solution then?

      1. Anand says:

        You need to stick to your plan. I have purchased house in Bangalore and I paid the whole amount to builder by cheque (20%) and rest was paid by bank (80%). There was no black money involved.

        1. sevan says:

          We can only stick to our plans as far as the budget of the flat is concerned. The final say definitely lies with the owner/builder. They will nonchalantly say “Take it or forget it”. Ultimately I feel its lucky to find a owner who agrees to take full-white…

      2. Pradeep says:

        That is ridiculous. In Bangalore, one can easily buy properties, if one wants to, without paying anything in black. We bought one for 80L in full cheque transaction. There can be instances where second hand flats, folks may expect black. But it does not mean, you cannot easily buy in white.

    2. Purna says:

      I totally Aggrred..!

  93. Niraj Kumar says:

    Hi Manish,

    Thanks a lot for the post, very informative.

    Hi Sohil,

    You said that state decides price of area according to its own calculation, is this ready reckoner available online?, is there any way to find out the Govt/State valuation of a land in any area?

    1. Yes, most of the states have it , but I am not sure where to find it out !

  94. Nishant Sahay says:

    The theme of the article is absolutely correct. The example has very well explained what an “ordinary” (read gullible) investor would do.
    However, even though the diff seems to be huge, it may not actually be so if we consider the time value of money. 🙂

    1. If you compute time value of money , still there is some good difference 🙂 . Anyways . I got your point !

  95. Snehal says:

    Will this arrangement work if we take into consideration the recent amendments made specifically for Real Estate Transactions in Budget 2013?

    1. What are those amendments ? Are you talking about the new regulations ?

  96. vikas himatsingka says:

    Hi, Manishjee, it is a true fact but i agree with Harsh mittal words and now, a days this are happening and black money is again re-invested in some other way.

    1. Yes . There are various angles to this whole thing .

  97. Sushila says:

    We were lucky that our flat owner explained all above while buying from him. He well explained this to us regarding long term gains and asked us to pay everything in white. He is very genuine old man who worked for Indian Navy and SBI.

    Me and my hubby are salaried and we had everything in it became very good deal to find this old gentleman.


    1. suyog says:

      That’s a one-off party you got. He not only saved you the loss you would’ve otherwise incurred when you sell the flat, but he also took the burden of paying more tax on himself by taking all white.

    2. Wow .. thats great !

      1. Sushila says:

        Ya, he took the burden bcoz their family was getting imigrated to Canada permanently. They wanted to show more liquid for Visa approval. Otherwise who wants to pay more tax.

        We wanted to give max white and he wanted to take max white.

  98. Anon says:

    The trick is to sell it to a seller who will again give some part of the money in black. So while selling for 1 crore, the seller asks for 20 L in black. And the cycle continues.

    Before you tell me what the seller will do with 20 L:
    1. He can buy gold biscuit in cash and keep it.
    2. He can invest in other property where he needs to pay cash again.
    3. He can invest it in his business.

    1. Yes he can do all of these . Whats the point ?

  99. Manish says:

    Hi Manish, what happens in general scenario is that while selling the house, the owner will again ask for a component to be paid in CASH (Black) by which the amount on which he will be taxed will be lower.

    In short, making a transaction in CASH once (while buying the flat) will force the person to ask for a CASH component while making another transaction (while selling the flat)

    1. Yea . and thats the whole cycle which is keeping the real estate prices up !

  100. Sohil says:

    Just for information.

    There is also concept of ready reckoner in maharashtra.
    Here the state decides price of area according to its own calculation.
    So in example Manish you mentioned that one showed 30 lakhs as cost price.But if according to reckoner calculation the price should be 37 lakhs .Than stamp duty must be paid according to that price.
    Also since a mismatch is seen here also it can cause scrutiny to the buyer.
    Also somewhere the reckoner price seem to be high say 45 lakhs whereas builder genuinely is ready to sell property for 40 lakhs to reduce his pile up.Than also stamp duty must be paid according to reckoner.

    In short government trying hard not to loose opportunity to earn its share of money.

    1. Atharva says:

      Sohil has a point which i have experienced very recently in Pune (Maha). The property deal was finalized @48L + taxes and the valuation as per ready reckoner turned out to be 45.5 L …. which is almost at par(and huge surpise to me) . So the trick played between buyers and sellers is know known by the govt is what might be the reason for increasing the ready reckoner rate. ..So the deal was made in complete white.


      1. Yes, even I saw this some time back !

    2. Thanks for that info Sohil

  101. harish mittal says:

    Sir, you are assuming that Selling price will be paid totally in cheque. But one who is paying less amount in cheque will also do the same at the time of sellling . He will accept omly 55-60 lacs in cheque & rest in cash, So here also he save some money

    1. pradip says:

      That depends on whom you are selling to. A real estate investor will be able to give you the cash you want. But, if you are selling it to a someone who will be buying it with a housing loan, your chances are slim. Lot of genuine customers(who will be buying for staying) won’t be able to offer a lot of cash.

    2. Yea . thats the way out !

  102. SONIA says:

    good one but what if we have no plan to sell it and use for our family for long term .then 1 part make sense and second part becomes irrelevant

    1. shivanand Shetty says:

      1. 70,000 saved can be invested which at the end of 7 years will compensate to some extent the loss incurred.
      2. White/black Component is existing system – which is 25-40% prevailing in the market.
      3. While selling, the sale again cash component comes to picture. So utlimate tax paid will be less.
      4. Normally whenever a flat is sold, the amount realised is invested in another flat. so it takes care of the profit earned…

      1. Sushrut says:

        And you will be the part of black economy. Why one should convert his hard earned money into black? By paying money in cash to builder, you are making your ‘SUPER WHITE’ money black.

        1. Prasanna says:

          We are helpless, I am one of victim who’s not able get a plot as I want to and can only pay in black. So, I lost 3-4 years in hunting for the right property, but property rate have gone more than double now… I am the biggest loser in the World!!! Everybody else (Owner, Agent, Reseller….Govt) made money…

          1. Prasanna says:

            Sorry! I wanted to say I want to and can only pay in WHITE.

          2. Vishal Kumar says:

            I also got the similar problem but ultimaterly found a person who will take entire money in white to enabling me get loan on the actual purchase price.

    2. Yes . Then its fine .

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