What common Indian citizen think about Black Money, an analysis

[Important Notes –

·      The thread is just a study and not covered any incident that can be real. It is incomplete and to be open for further study.

·      I am not any economist also not referred any book all are just personal views and hence cannot be considered in the law as individual views can be differ and respected

·      Thread is incomplete

]

There might have 2 types of black money. [Exclude Government Money, there are economist handling it]

1)      Tax paid till service class, later converted to cash

2)      Money from Hawala

What we need to understand - Flow of Cash

Scenarios 1 –

Person X is a serviceman/entrepreneur who paid tax on Y amount. Now he wanted to purchase House/Household items for that he used cash or cheque to third party, the money is as immediately converted in clack money.

Why ?

Example – House/Flat

A person in Mumbai/ Gurgaon/Banglore or their suburbs wanted to purchase flat. Taking case where extremely low black money will get created. Possibilities are unlimited.

 

Estimated Value – 75 Lacks above.

Take 1 Cr for example.

Now who is eligible to buy flat worth 1 Cr(eligibility to buy a flat in Mumbai/Gurgaon/Banglore and Suburbs)?

At least monthly income require to be 1.5 Lack take home salary. That means 2 Lack per month and 24 lack per annum.

Then here is twist, Stamp duty and Registration to be paid is 10 lacks + Parking to be paid 5 lack + Floor rise to be Paid at least 5 lack.

20 Lacks extra. This will impact purchase and resulting the registration of flat to reduce to 75 lack and rest to be required as black money or 3^rd party cheques.

 

Solutions –

1)      Stamp duty and Registration to be charged by centralized organization.

2)      There must be facility to pay it in EMIs.

3)      The floor rise and Parking not to be charge extra and should be part of the agreement. [This can be done today but no restriction]. No separate parking to be sold other than flat by builder.

4)      The flat selling in the project should have uniform rate per square feet. Each quarter the

rate should be declared and flat not to be sold below that.

This is very hard to implement and there might have a huge impact on builder lobby as their selling will be impacted with existing marketing and sales model. But this is huge beneficial for a home buyer. Uniformity will help to reduce black money as well as it also reduces the over value selling by builder to cover its elite class cheap selling.

What I mean elite class cheap selling –

If I am a builder then in India you need to make happy all the local, state politicians also the babus who are sitting for eating. They will make their purchases cheap so that they should pay less taxes as well as their property values seen very very less comparative to market price.

5)      Rate of properties to be capped in limits areawide and to be decided by centralized department, to be update every quarter. Selling below or above the limit by builder should be an offence.

6)      Under value selling from Individuals(not builders) also need to be screened and to check whether any black money involved. The accounts of seller and purchaser to be checked if huge cash withdrawal or transfer to purchaser is happened in the period.

Scenario 2 -

The scenario is very simple and difficult to trace, I request economist to study the model and its destinations.

Shops like Sweetmarts, Pharmacy, Clinic, Hospitals, showrooms, supermarkets who have sell and purchase of over some specific amount like in Cr per month. They need to scanned as more than 80% of cash is involved in such areas.

 

I will update this thread, your suggestions and corrections are welcome in the comments.