5 years of demonetization: cash still a key element in real estate transactions

NEW DELHI: As India wraps up 5 years of demonetization, cash is still a key element in many transactions, especially those related to real estate, a LocalCircles survey showed.
According to her, 70 percent of people who bought property in the past 7 years have paid part of it in cash.
Experts believe that black money is back in the system, and demonetization only managed to reduce its supply for a few years.
Black money in real estate operations
Real estate has always been a way of turning black money into white money by buying multiple properties on behalf of others.
The survey indicates that cash is still widely used in the buying and selling of properties, mainly to evade taxes paid to the government, through commission agents, middlemen or brokers.
Even for many MSMEs, the sale and purchase of real estate, the sale and purchase of agricultural land, transactions continue to take place with the registration of property at a fraction of the value paid in cash, thus avoiding taxes.
On a global basis, 16 percent of people who bought a home paid more than half the amount in cash.

Although several efforts have been made by the authorities to curb the threat, such a practice remains important.
Digital transactions have accelerated rapidly
Over the years, India has seen a dramatic increase in the use of digital payments, which ultimately led to an increase in the number of consumers receiving a digital receipt for their purchase.
India has seen a rapid increase in the use of digital payments since the start of the pandemic. For example, UPI payments have grown 109% over the past 12 months, with transactions worth Rs 6.06 lakh crore in July 2021.

Other forms of digital payments like credit and debit cards have also seen similar growth.
However, despite the government’s efforts to digitize the economy, money in the economy is still the king and reached 14.7% of GDP in 2020-2021, according to data from the Reserve Bank of India annual report. (RBI).
Money with the public
RBI data shows the currency with the public for the fortnight ended October 8 stood at a record high of Rs 28.30 lakh crore, up 57.48% or Rs 10.33 lakh crore, compared to to a level of Rs 17.97 lakh crore on November 4, 2016.
Cash with the public increased 211% from Rs 9.11 lakh crore, recorded on November 25, 2016. It increased 8.5%, or Rs 2.21 lakh crore, year over year. other.
The jump was primarily driven by a rush for public money in 2020 as the government announced a strict lockdown to combat the spread of the Covid pandemic, the investigation added.
95% used cash to pay for groceries, restaurant meals, and food delivery
7% of respondents said they used cash to purchase groceries and food deliveries, gadgets such as smartphones, laptops, etc., and valuables such as goods , jewelry, used vehicles.
On a global basis, of those who used cash for purchases in the past 12 months, 95 percent used it to pay for groceries, restaurant meals, and food delivery.

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