According to section 269SS of Income Tax Act, while transacting Immovable Property, 100% penalty will be levied if seller has accepted an amount of Rs. 20,000 or more in cash from the buyer.
According to section 269SS of Income Tax Act, while transacting Immovable Property, 100% penalty will be levied if seller has accepted an amount of Rs. 20,000 or more in cash from the buyer.
According to section 269SS of Income Tax Act, while transacting Immovable Property, 100% penalty will be levied if seller has accepted an amount of Rs. 20,000 or more in cash from the buyer.
According to section 269SS of Income Tax Act, while transacting Immovable Property, 100% penalty will be levied if seller has accepted an amount of Rs. 20,000 or more in cash from the buyer.
According to section 269SS of Income Tax Act, while transacting Immovable Property, 100% penalty will be levied if seller has accepted an amount of Rs. 20,000 or more in cash from the buyer.
NEW DELHI: If you have made a payment of over Rs 20,000 in cash while buying a property, be prepared for an income tax notice. In order to curb the generation of black money by way of cash dealings in immovable property transactions, Section 269SS of the Income-Tax Act affected some changes for the realty sector in 2015.
According to the tax law formulated by the Central Board of Direct Taxes (CBDT), which is effective from June 1, 2015, any transaction in real estate including agriculture land has to be made through account payee cheque or real-time gross settlement (RTGS) or electronic funds transfer if the amount is Rs 20,000 or above.
If the cash transaction is done beyond the limit, then a penalty of an amount equal under Section 271 D of Income Tax Act will be imposed on a seller who accepts cash or refund of advance is made in cash by the seller of the property.
" Fir example if for selling an immovable property “A” has received an amount of Rs.1 lakh in cash from “B” then “A” has to pay 100% penalty of Rs. 1 lakh. That means, Cash Transaction should be done carefully when selling a Plot, House Property, Flat, Shop etc. Generally, in the rural areas cash transactions are done in property, as the buyers are not considered trustworthy. Issues of Cheque bounce; etc creates legal hassle for the property sellers. Now it will be difficult to carry on such transaction in cash," explains CA Umesh Sharma.
Moreover, According to section 269T of Income Tax Act, 100% penalty is levied while repaying the amount received for transfer of immovable property in cash for Rs 20,000 or more. E.g. if any transaction of Immovable Property is cancelled then while repaying the amount received 100% penalty will be levied if the amount of Rs 20,000 or more is paid in cash. So, wherever property advance is repaid, in case the deal is cancelled it should be done in cheque only.
However, farmers selling there agricultural land will not be covered under this Section only if they don’t have any other income chargeable to tax.
Another important factor to keep in mind is that transactions for an immovable property of a value Rs 30 lakh or more is to be reported to the income tax authorities.
"Such property transaction should be reported in Form No. 26 AS and Form 61A which is statement for specified financial transactions. Purchasing/Selling an immovable property over Rs 30 Lakhs is considered a high value transaction and such transactions needs to be reported. Tax authorities may examine by way of this information whether the individual has reported the income in his/her tax return. Tax Authorities keeps a check on such transactions and if the same is not reported and the tax authorities find discrepancies, action can be taken by the authorities against such individual," said Aditya Chopra, Managing Partner, Victoriam Legalis - Advocates & Solicitors.
In order to clamp down on black money and disincentivise cash transactions, the RBI notifications provide not only for KYC requirements, but also mandates that banks are to report cash transactions of more than Rs 10 lakh to their controlling offices.
"Further any cash transactions of Rs 50,000 require the reporting of PAN. The Income Tax Act provides support in this endeavour and to counteract tax evasion through provisions such as Section 269 SS, which prohibit cash transactions of more than Rs 20,000 for loans or cash deposits. Additionally, Section 269 ST, prohibits any person from receiving in cash a sum of INR 2 lacs or more, otherwise than through a cheque, draft or electronic transfer from a single person in a day or with respect to a single transaction or from a single event or occasion from one person," said Jyotika Jain, Partner, Miglani Varma & Co - Advocates, Solicitors and Consultants.
So before you get lured into making part payments to a builder in cash, beware of the income tax penalties. In a survey conducted by community platform LocalCircles in 2021, 70% respondents said they have paid a component of the total payment towards a real estate transaction in cash in the last seven years. About 16% of respondents said they paid over half of the amount in cash.
