Scrapping Rs 500 and Rs 1,000 notes to hit real estate deals
The realty sector, which thrives on black money transactions to evade taxes, could be one of the worst affected by the government’s move to “demonetize” Rs 500 and Rs 1,000 notes will. The real estate sector in India contributes about 11 percent of the gross domestic product (GDP). Investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported.
About a third of India’s black money transactions are believed to be in real estate, followed by manufacturing and shopping for gold and consumer goods.
Black money arises mainly from incomes not disclosed to the government usually to avoid taxation and sometimes because of its criminal links.
The move will also affect money laundering in concealing the source of illegally gotten money. Hawala is a parallel international banking system based on trust where money moves without leaving a trail.