Last month, a petition was filed before the Delhi high court, seeking linking of movable and immovable property documents of citizens with their Aadhaar numbers to curb corruption, black money generation and benami transactions. The court has asked the Unique Identification Authority of India (UIDAI) to respond in the matter. While the matter is sub-judice as of now, if linking of Aadhaar to property documents is indeed allowed, the real estate sector may see the dawn of a new era of transparency, experts told Ashwini Kumar Sharma.
Shishir Baijal, Chairman and managing director, Knight Frank
Will put land records in order, minimize disputes
The linking of Aadhaar to immovable properties will allow owners to firmly establish their rights on their properties and, thereby, create transparency in ownership details.
Property markets for long have suffered due to poor land records; this kind of data linkage will also help create approachable online records for the future. Legal discrepancies, including inheritance issues, property disputes and conjoined ownership, will be addressed more efficiently. The linkage will also provide access to records for taxation purposes. Proper documentation will give confidence to buyers, especially in the secondary market. In due course, we may be able to move property transactions to an online method as well. A and transparent market allows pricing to be determined more objectively. This will help the secondary market pick pace and firm up prices more than its possible impact on the primary market. Even now, we see properties with clear and marketable titles garnering greater interest and this will continue for the right properties.
Rajesh Narain Gupta, Managing partner, SNG & Partners
Move may put an end to benami transactions
It is common knowledge that black money generated in any form has been historically diverted to acquisition of real estate for the last several years, which in turn has been responsible for the increase in real estate valuations. It is also common knowledge that there are several benami transactions in the country, where the beneficial and true owner is hidden behind the owner who is shown as the registered owner in the records. In fact, this was one of the main reasons compelling the government to make benami transactions a criminal offence.
If the purchase is linked to Aadhaar, the actual seller and buyer can be identified for each transaction. It can be established how many properties are held in someone’s name at the click of a mouse. It will be difficult or rather impossible to hide the identity of the actual owner if Aadhaar is linked to the acquisition of the property. Further, it will reduce and eliminate cash transactions. Those handling unaccounted money will find it impossible to use it to acquire real estate in benami form.
Anuj Puri, Chairman, Anarock Property Consultants
Evaders will be easily identified by tax department
Linking of immovable property with Aadhaar can help streamline and give teeth to the benami transaction law. In its efforts to make the real estate sector more transparent, the government implemented the Benami Transaction Act in 2016.
When linking Aadhaar becomes mandatory during property registration, the practice of buying immovable properties under fictitious names will come to a halt. Also, it will become easier for the tax department to detect individuals who have been making property purchases despite showing lower earnings in their tax books. This will have a positive impact on the overall real estate sector by negating tax evasion.
However, we may see some decline in the second or third home purchases made by individuals. In order to avoid showcasing their actual wealth for the tax department to scrutinize, people often purchased immovable properties with their unaccounted wealth. Hence, second and third home purchases could take a hit as tax evasion will now become impossible.
Abhilash Pillai, Senior real estate partner, Cyril Amarchand Mangaldas
Changes in technology, infrastructure needed
Before linking Aadhaar with all property transactions, the revenue and land record departments should be equipped with adequate technology, infrastructure and resources to handle such huge database.
If Aadhaar is made mandatory for all property transactions, the identity of the person undertaking such transactions can be readily authenticated. It will minimize fraud transactions, forgery and impersonation. Also, any investment in property will be easily traceable and can be verified with the income tax returns of such individuals. This will help in identifying properties which are acquired through undisclosed income. The increased transparency will also keep black money and benami transactions under check and consequently, it will help genuine buyers.
The downside is lesser the value, lesser the stamp duty collection by the state governments. But, one question that remains unaddressed is—how will Aadhaar be made mandatory for transactions undertaken by companies. There has to be an Aadhaar equivalent for such transactions.