- Time has come to tackle sources of black money, says T V Mohandas Pai
- Land, property registration charges estimated at Rs 1 lakh crore, he adds
- Gold 'another big store of black money', says former Infosys CFO
Stating that time has now come to tackle the sources of black money after demonetisation, the former chief financial officer of IT major Infosys Ltd said registration charges on land and property across India annually are estimated at around Rs 1 lakh crore.
"Assuming an average rate of five per cent, the gross value registered could be around Rs 20 lakh crore. Even assuming that around 20 per cent of the consideration is paid in cash with black money, the black money used could be Rs 5 lakh crore a year, some with withdrawal from bank accounts. The main reason for this is to avoid income tax and lower registration charges," Mr Pai told PTI.
Pitching for abolishing capital gains on sale of land and property if held for more than three years, he noted that the revenue from long-term capital gains around three years ago was less than Rs 10,000 crore and around one per cent on indirect taxes of nearly Rs 9 lakh crore.
"By this move (abolishing tax), citizens will be incentivised to register the correct amount, and over five years, use of black money can be almost eliminated. This one move will clean up real estate more than the 'Benami Law'," he said.
Pointing out that gold is "another big store of black money", the chairman of Manipal Global Education Services and Aarin Capital Partners said India imports around 800 tonnes of the yellow metal every year costing Rs 2.25 lakh crore (around $30-32 billion).
Mr Pai, a member of Board of Directors of National Stock Exchange of India Ltd, estimated that India today has around 25,000 tonnes of gold with around 5,000 tonnes in bars and coins, and the jewellery trade could be worth around Rs 5 lakh crore every year with may be 50 per cent in cash.
The former chairman of SEBI Primary Markets Advisory Committee suggested that in Budget 2017-18, capital gains on sale of gold be abolished if held for more than three years.
"The income tax received on gold sales is minuscule but what this (abolishing tax) will do is to make the trade largely honest and ensure that gold becomes more an investment than a store of black money in urban areas. It will also bring in gold into the market as local supply reducing imports, increase trade and create a true gold market in India," Mr Pai pointed out.