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Home buyers, hoard black money first

Buying a house just became even more difficult. Developers have begun demanding 40% to 50% of the total cost of the flat in black (hard cash) against the earlier 20% to 30%.

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Buying a house just became even more difficult. Developers have begun demanding 40% to 50% of the total cost of the flat in black (hard cash) against the earlier 20% to 30%.

According to real estate experts, developers are increasing the black money component to save on income tax.

“Developers may earn huge profits, but they do not want to pay income tax on earned income and cost of the projects. Developers from Navi Mumbai and its extended locations ask for massive amounts of black money. As a result of it, the end user finds it difficult to buy a house,” said Pankaj Kapoor, managing director of Liases Foras, the real estate research firm.

Kapoor added that only these black-money holders were buying the expensive houses. “Black money holders cannot park their cash anywhere. Real estate is the one of the best options in which to park their money. The irony is that this is causing an escalation in property rates.”

Ashutosh Kulkarni, who works in a private firm, was shocked when his developer asked him to pay 50% of the cost in hard cash. “It is really difficult for a salaried person to pay such a high amount. We neither have the black market or benami property which I can sell and pay the developer. I cancelled twice to buying a house plan in Navi Mumbai. The government should do something to stop the use of black money. There are very few developers who accept cheques and white money in Navi Mumbai,” he said.

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