Real Estate Sector Still Feeding On Cash Transactions Six Years After Demonetisation: LocalCircles Survey

Even after six years of demonetisation, the prevalence of black money in real estate transactions remains. In its sixth-year survey since demonetisation, LocalCircles collected responses from over 32,000 citizens in 342 districts in India. Of these, 11,499 responded to a question related to their real estate purchases in the last seven years. Forty-four percent of them admitted to making a part of the payment in cash. The survey revealed that 8 percent of the respondents had paid more than half the total amount in cash. While 15 percent had paid 30-50 percent of the value of the property/land in cash, another 10 percent of the respondents paid 10-30 percent in cash. Thirty-five percent of the people did not divulge the details of their real estate transactions.

Property-related transactions were the top area of cash usage as per last year’s survey as well. Back then, 70% of the total respondents had admitted that they made transactions in cash in order to pay for their property purchases in the past seven years.

Land and property transactions continue to take place in cash as that allows property owners to avoid paying full taxes.

Even in daily life, things such as paying domestic help, house repairs, and other expenses were largely dealt with in cash, without receipts. The survey asked respondents to name the categories of services for which they had paid in cash without receipts in the past year. There were three categories and their combinations to pick from. Thirty-eight percent of the respondents said they used cash primarily to pay salaries of domestic help and for services like house repairs (categories 1 and 3). Moreover, an additional 20 percent said they used cash to pay their domestic helpers (category 1).

The prevalence of cash usage in the country had gone down, first due to demonetisation and later due to the pandemic, where people were restricted to ordering and paying for things online. Yet, with the rampant use of cash without receipts and black money, the jury is still out on the success demonetisation has seen.

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