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The Indian government is considering linking Aadhar cards with real estate transactions. This could be a real game changer for the economy as nearly 60 per cent of the black money in the country is usually injected into immovable assets in the form of both residential and commercial properties. Nearly everyone from individuals to family-managed trusts as well as closely held charitable trusts is pumping black money into real estate transactions.
Within a few months of the government announcing demonetization, black money transactions made a comeback in real estate which is mainly in the premium segment. Real estate investments that are made by black money are usually in premium properties worth over Rs 3 crores.
Now the Indian government is planning to combat the challenges by linking Aadhar cards to real estate transactions. This is expected to bring accountability and transparency in real estate transactions. Linking property with Aadhaar card is expected to reduce black money in real estate and lead to a crackdown on Benami properties.
The Indian government has already linked the Aadhaar card to bank accounts, etc., and is planning to take additional steps for the property market also. The Union housing minister suggested that this plan is definitely in the works and would be announced soon.
Speculation has been going on about when this move will be implemented. A few months back, the Finance Minister had also stated that the government is considering this Aadhaar linkage in real estate. A report also suggested that the government planned to amend Sections 32 and 32A of the Registration Act, 1908, and wanted to provide legal backing to Aadhaar-enabled authentication of property documents.
A number of states are already taking a step in this direction. Uttar Pradesh's revenue department is finalizing a proposal whereby it would become mandatory for the land-owners to furnish their Aadhaar numbers and get it duly verified. New owners will need to add their Aadhar card numbers at the time of property registration. The Maharashtra government is also planning to implement similar steps and has reportedly in talks with the National Informatics Centre to link the land records as well as property ownership details with the Aadhaar number of the owner.
The linkage of Aadhaar card becoming mandatory in property transactions will have huge implications for the sector. The real estate sector has been witnessing a slowdown considerably in due to the implementation of demonetization, GST and RERA and it would take even longer to recover if the new policy is implemented. However, the overall sentiment is positive, as it will bring more transparency to the sector as well as help in understanding supply-demand as well as sales and pricing trends in the sector.
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