Paid On-Money for Flat? IT Dept Can Tax You Too

Paying secret cash over the official price to buy property is called 'on-money'. Tax authorities are cracking down hard. If caught, both the buyer and seller can face massive tax demands, penalties, and even prosecution — not just the builder.

Here's what happened: Tax authorities have intensified scrutiny of 'on-money' property deals — undisclosed cash paid over the official registered price — using seized builder documents and digital evidence.. Appellate tribunals are increasingly remanding on-money cases for fresh adjudication, meaning these matters stay alive for years, keeping both builders and buyers exposed.. Buyers who pay on-money can face tax demands under Section 69C (unexplained expenditure) at a punishing flat rate of 60% plus surcharge — independent of any case against the builder..

What you should do: Check your property sale agreement — if the registered price is lower than what you actually paid, document the full transaction now and consult a tax advisor before the IT department does it for you.. Avoid any cash component in property transactions entirely; insist all payments go through banking channels and are fully reflected in the registered sale deed.. If you've already paid on-money in a past transaction, consider a voluntary disclosure discussion with a chartered accountant before a notice arrives — proactive disclosure typically attracts lower penalties than a post-notice demand..

Pro tip: IT officers can use the builder's seized documents to reconstruct your transaction even if you're not under scrutiny — your name in their records is enough to open a case against you.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.