The Shadow Economy in Real Estate: Why Transparency is Non-Negotiable
The recent reports on how real estate transactions are evading tax authorities through the use of fake Permanent Account Numbers (PANs) are deeply concerning. It appears thousands of property deals across the country have slipped under the radar, enabled by deliberate reporting lapses and fictitious identities for buyers and sellers economictimes.indiatimes.com. This news, also highlighted by msn.com, paints a clear picture of a system vulnerable to manipulation, undermining both financial integrity and public trust.
The news about realty transactions evading taxmen using fake PANs resonates deeply with an idea I brought up years ago. As far back as November 2015, and again in June 2019 when the Centre considered a common web portal, I suggested the necessity of such an integrated platform for real estate regulators Common web portal for realty regulators. I had foreseen the challenges posed by disparate information and urged for a system that could prevent contradictory orders and share vital project and agent details across the country. Seeing how things have unfolded with rampant tax evasion today, it's striking how relevant that earlier insight still is. I feel a sense of validation that the need for a unified, transparent system was clear then, and now there is a renewed urgency to revisit those earlier ideas, because they clearly hold value in the current context of ensuring accountability and preventing such financial malpractices.
My long-standing emphasis on robust regulatory frameworks and transparency in the real estate sector has been a recurring theme in my reflections. Indeed, as far back as 2015, I questioned the efficacy of existing systems and advocated for more stringent measures. This was further elaborated in November 2017 when, following reports of Prime Minister Narendra Modi's intention to use Aadhaar to track 'benami' properties – assets bought with illicit funds in another's name – I proposed an even more comprehensive approach in my blog, "Nami or Benami ? Why Differentiate ?" myblogepage.blogspot.com. Instead of merely tracking benami properties during transactions, I argued for a system where all properties, whether 'nami' (owned in one's own name) or 'benami', must be mandatorily linked with the Aadhaar number of their owner, regardless of whether a transaction is occurring. My suggestion emphasized the proactive linking of property to identity to prevent evasion from the outset.
To bolster this, I proposed that all property transactions be registered online on a government portal, requiring comprehensive details:
- Name of the Seller / their Aadhaar Number / PAN Number
- Address of the property (even suggesting the precision of www.What3Words.com)
- Selling Price / Bank Account where the amount is deposited
- Name of the Buyer / their Aadhaar Number / PAN Number
- Buyer’s Bank Account Number from which payment is made
Such a robust digital framework, integrating identity with property ownership and transaction records, would leave no room for properties to remain undisclosed or 'benami', effectively curbing the shadow economy. These detailed suggestions, made years ago, highlight the consistent need for foundational changes to bring complete transparency to the real estate sector and align perfectly with today's urgent call for accountability in the face of fake PANs and tax evasion.
Regards,
[Hemen Parekh]
Any questions? Feel free to ask my Virtual Avatar at hemenparekh.ai
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