C Shivakumar @ CHENNAI:
Tamil Nadu has stepped up efforts to curb unaccounted cash in property transactions by issuing a directive that requires all cash payments exceeding ₹20,000 during registration to be reported to the Income Tax Department.
This circular, released on August 1, 2025, lowers the state’s internal vigilance threshold well below the ₹2 lakh limit stipulated under Sections 269SS and 269ST of the Income Tax Act, reflecting a more stringent approach to tackling tax evasion in real estate.
The order also warns registration officers of disciplinary action for failing to comply, underscoring the government’s intent to hold officials accountable for enforcement lapses. It follows a recent Supreme Court judgment that criticised weak enforcement of existing tax provisions and emphasised that ignorance of the law would not be accepted as a defence.
According to the circular, all registering officers must verify whether cash payments above ₹20,000 appear anywhere in the transaction documents and report such cases to the relevant income tax authorities. The directive requires courts to notify the tax department if a civil suit involves claims of cash payments of ₹2 lakh or more, and registration officials must escalate any information from any source indicating cash transactions above this limit. However, the most notable change is the requirement for routine reporting of cash payments above ₹20,000, even if only mentioned briefly in documents.
While Tamil Nadu already mandates digital payments for stamp duty and registration fees, these rules do not cover the transaction’s consideration amount, where much of the unaccounted cash is typically hidden. The new order aims to plug this gap by bringing greater scrutiny to the sale price and discouraging under-the-table payments, sources said.
However, the effectiveness of the order hinges on implementation, as many real estate deals involve informal arrangements and undisclosed payments that may never appear in official documents. By shifting the burden of vigilance to registration officers, the government hopes to deter cash transactions in property sales and strengthen the fight against black money in real estate. Whether this initiative will succeed in transforming entrenched practices remains to be seen.
Tamil Nadu has stepped up efforts to curb unaccounted cash in property transactions by issuing a directive that requires all cash payments exceeding ₹20,000 during registration to be reported to the Income Tax Department.
This circular, released on August 1, 2025, lowers the state’s internal vigilance threshold well below the ₹2 lakh limit stipulated under Sections 269SS and 269ST of the Income Tax Act, reflecting a more stringent approach to tackling tax evasion in real estate.
The order also warns registration officers of disciplinary action for failing to comply, underscoring the government’s intent to hold officials accountable for enforcement lapses. It follows a recent Supreme Court judgment that criticised weak enforcement of existing tax provisions and emphasised that ignorance of the law would not be accepted as a defence.
According to the circular, all registering officers must verify whether cash payments above ₹20,000 appear anywhere in the transaction documents and report such cases to the relevant income tax authorities. The directive requires courts to notify the tax department if a civil suit involves claims of cash payments of ₹2 lakh or more, and registration officials must escalate any information from any source indicating cash transactions above this limit. However, the most notable change is the requirement for routine reporting of cash payments above ₹20,000, even if only mentioned briefly in documents.
While Tamil Nadu already mandates digital payments for stamp duty and registration fees, these rules do not cover the transaction’s consideration amount, where much of the unaccounted cash is typically hidden. The new order aims to plug this gap by bringing greater scrutiny to the sale price and discouraging under-the-table payments, sources said.
However, the effectiveness of the order hinges on implementation, as many real estate deals involve informal arrangements and undisclosed payments that may never appear in official documents. By shifting the burden of vigilance to registration officers, the government hopes to deter cash transactions in property sales and strengthen the fight against black money in real estate. Whether this initiative will succeed in transforming entrenched practices remains to be seen.
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