Model code impacts property transactions across Karnataka

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The model code of conduct and the resultant curbs on carrying cash are stated to have impacted property transactions across the State, and this has been vouched by the Department of Stamps and Registration.

The dip in registrations pertain mostly to individual homes, sites, and agriculture and non-agricultural land that command a higher market value compared to the guidance value fixed by the government, say insiders in the real estate sector. The vigilance on cash movement by the Election Commission has made people wary of carrying cash. “In most cases, a part of the transaction is not shown on record during registration since the sale value is higher than the guidance value. The gap between the registered value and the real value is paid in black money, or unaccounted money,” said K. Ramesh, a Bangalore-based property management consultant. “If the cash is seized during transit, receipts or the origin cannot be produced for this amount.”

The decline is testified by the figures compiled by the Department of Stamps and Registration during March 2014 over the corresponding month of the last fiscal. While March 2014 saw a collection of Rs. 511.42 crore as stamp duty and registration fee, the department collected Rs. 530.21 crore last March. Significantly, this decline comes despite the department’s annual revenue growing by 14 per cent in 2013-2014 over the previous financial year.

Mr. Ramesh, however, said that registration of these transactions is mostly “deferred” and not cancelled.

This trend has kept 40-year-old A.S. Kumar (name changed), who entered into an agreement to sell his house in Ullal in February this year, on tenterhooks. “The buyer wants to register the house and make the rest of the payment only after elections since some amount in the sale consideration is not being shown during registration,” he said.

Though officials in the Department of Stamps and Registration acknowledged that the election-related curb has affected a section of transactions, they said those buyers using demand draft or cheque of even accounted cash continue to register their properties.

“According to the RBI directive, all transactions above Rs. 50,000 have to be made through cheque and the Election Commission is merely implementing the directive. We will ask the source if the amount is more than Rs. 50,000, and if they fail to provide adequate proof, then the money will be seized,” an official with the EC said.

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