CHENNAI: The office of the Inspector General of Registration in TN has issued a circular to all the officers to verify whether cash payments above Rs 20,000 are referenced, even briefly, in any documents that are being registered and report such cases to the Income Tax department.
The circular, released on August 1, brings down the threshold well below the Rs 2 lakh limit for cash transactions stipulated under sections 269SS and 269ST of the I-T Act, in a bid to curb exchange of unaccounted cash in property transactions. The order also warns registration officers of disciplinary action for failure to comply.
Sources said the circular follows a recent SC judgment that criticised weak enforcement of existing tax provisions. While TN already mandates digital payments for stamp duty and registration fees, these rules do not cover the amount transacted between the parties involved in the registration.
The present circular seems to address this gap. However, the circular’s effectiveness remains to be seen as many real estate deals involve informal arrangements for cash transfers that may never appear in documents.
“This rule ensures transparency in property transactions, reducing the risk of tax evasion and making the real estate market cleaner,” said Sivakumar P, global business head, G Square. The risk of fraudulent activities decreases, safeguarding customers’ investments and will boost buyer confidence, as customers feel more secure knowing that transactions are transparent and compliant with regulations, he added.