JOIN USThe government will soon bring property dealers under the purview of Prevention of Money Laundering Act (PMLA) so as to curb the use of black money in real estate and sky-rocketing prices.
Preparations are on foot to amend laws to incorporate real estate agents in PMLA. The measures are being hastened after the income tax department in post demonetisation searches and raids found that huge cash was used to purchase properties by big businesses.
During the raids, it was found that real estate was one of the sectors where maximum amount of black money was parked. Subsequently, the government also brought Real Estate Regulation Act (RERA) to monitor land owning and purchase business. However, it was felt that some more rules were required to put a curb on excess use of cash in this sector, a senior government government official said.
He said that the government may also set a new definition for property dealers. The National Institute of Public Finance and Policy (NIPFP) also took stock of the situation in this sector around the demonetisation period and found that that the estimated black money generation in real estate was around Rs 5.7 lakh crore.
The report had proposed a four point action plan which included expansion of definition of capital assets to include transfer of farm land outside 8 km of a municipal limit. According to NIPFP, the real estate agent largely depend on informal credit market to meet their financial requirements as credit is not available from formal financial institutions for purchase of land.