Real estate is among the oldest and the most profitable businesses. I don't know much about it, except for one thing. Every single time I want to buy, sell or rent a residential property, I face tax evasion quandaries. Without fail.
The first time I noticed it was when I wanted to buy an apartment. The seller wanted several things:
a) Bulk of the payment in cash
b) The sale deed would only record a portion of the actual money transacted
c) Registration (and correspondingly the registration fee) would also reflect the same portion
The broker (or "Real estate agent" if this term offends you) wanted a similar deal too. When they sensed I wasn't happy with this, the seller told the broker, to find another buyer. I was promptly treated to several sermons (by the broker, as well as several well-meaning elders & friends).
"Be practical, this is the real world";
"You need to live in a society; so you abide by its rules";
"He is only trying to help you; it will save you a lot of registration fees!"; and so on.
The final nail in the coffin was "Look, if you are so particular, why don't you show both parts (cash, as well as cheque payments) of the money in your books; and let him worry about his books". I finally relented.
Several years later, I now face the same quandary when I want to sell my apartment. I can't find a single buyer who is prepared to deal completely in "white".
The situation is no different with rentals. I have not rented a single place so far where the owners are ready to accept entire rent in white or apply TDS. Once the topic is raised, they realize that I am "undesirable number 1" and it is "too risky to take me on as a tenant".
Well, this is a confession of sorts; I wouldn't be writing this if I weren't ready to pay-up penalties. But the whole purpose of bringing this up would be lost, if we aren't ready to face two questions:
1. Is this a simple case of our declining morality, evil effects of materialism and/or greed? So perhaps we just need more "moral science" classes in our childhood and stronger policing (plus tax audits)?
2. Is there something in this picture (of taxation & governance) that our law makers and administrators are missing -- converting otherwise honest citizens to law-breakers?
I am reminded of a related story:
A well manicured lawn in front of our office building had the obligatory "please don't walk on the grass" boards as well as a designer walkway around its edge. Needless to say, both were ignored and soon a grass-less trail cut across the lawn -- along the path that people always walked. The estate manager removed the boards and the designer walkways; and re-laid the walkway along the path that people walked.
The first time I noticed it was when I wanted to buy an apartment. The seller wanted several things:
a) Bulk of the payment in cash
b) The sale deed would only record a portion of the actual money transacted
c) Registration (and correspondingly the registration fee) would also reflect the same portion
The broker (or "Real estate agent" if this term offends you) wanted a similar deal too. When they sensed I wasn't happy with this, the seller told the broker, to find another buyer. I was promptly treated to several sermons (by the broker, as well as several well-meaning elders & friends).
"Be practical, this is the real world";
"You need to live in a society; so you abide by its rules";
"He is only trying to help you; it will save you a lot of registration fees!"; and so on.
The final nail in the coffin was "Look, if you are so particular, why don't you show both parts (cash, as well as cheque payments) of the money in your books; and let him worry about his books". I finally relented.
Several years later, I now face the same quandary when I want to sell my apartment. I can't find a single buyer who is prepared to deal completely in "white".
The situation is no different with rentals. I have not rented a single place so far where the owners are ready to accept entire rent in white or apply TDS. Once the topic is raised, they realize that I am "undesirable number 1" and it is "too risky to take me on as a tenant".
Well, this is a confession of sorts; I wouldn't be writing this if I weren't ready to pay-up penalties. But the whole purpose of bringing this up would be lost, if we aren't ready to face two questions:
1. Is this a simple case of our declining morality, evil effects of materialism and/or greed? So perhaps we just need more "moral science" classes in our childhood and stronger policing (plus tax audits)?
2. Is there something in this picture (of taxation & governance) that our law makers and administrators are missing -- converting otherwise honest citizens to law-breakers?
I am reminded of a related story:
A well manicured lawn in front of our office building had the obligatory "please don't walk on the grass" boards as well as a designer walkway around its edge. Needless to say, both were ignored and soon a grass-less trail cut across the lawn -- along the path that people always walked. The estate manager removed the boards and the designer walkways; and re-laid the walkway along the path that people walked.
Well........it's chicken and egg story. We(Indian subcontinet inhabitants) never stood high on morality...if not to make it generic, may be good amount of us have supported imorality due to misrules of foreigners and then same culture getting adopted post independence. When we have Billionaires(without either inheriting or earning from business) to rule this country either as politician or as a Public Servant, then why should I deny myself the share or prosperity. A person risks all his savings to buy a property and what ever he earns is notional income as if he spends the same amount in property he is anyway going to spend more than WHY TAX HIM so heavily. Even if he shows it as long term capital gains and shows the income in his papers and then invest still the vultures are there to prey on him. So despite person holding high moral grounds he still has to follow the safe path as laid by others.....can't help it other than just venting out in blog.
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