2 in 3 Homebuyers Pay in Cash, Bribes Rampant in Real Estate Deals: LocalCircles Survey

Hyderabad: Black money and corruption in the real estate sector in India manifest in various ways, including inflated property prices, cash transactions to evade taxes, and a lack of transparency in deals.

According to a survey by LocalCircles, 2 in 3 citizens who bought property in the last three years said they paid part of the amount in cash, with 1 in 4 admitting that more than half the deal was off the books.

Despite government initiatives to link Aadhaar with property for maintaining digitised records, promoting transparency through digital payments, and streamlining processes, black money still fuels the sector. It is not uncommon to see salaried people having to convert their tax-paid money or legal income to black money for property purchase. Countering government policies, the process of buying and selling property remains intertwined with bureaucratic hurdles and high transaction taxes.

Up to 50 per cent of high-value property deals involve unreported cash, evading taxes and inflating prices, according to Dr Rakesh Verma, a former bureaucrat, in a policy paper. In the report ‘Addressing Inflated Real Estate Prices in India – Tackling Corruption, IAS Involvement, and the Role of Big 4 False Reports’, Verma states that regulatory inefficiencies, like the need for 40–70 approvals, create bottlenecks, thereby fostering corruption and increasing costs, which are passed on to buyers.

The Indian real estate market saw a significant increase in land transactions in the first half of 2025, with deals worth Rs 30,885 crore, according to Anarock Property Consultants. This surge in activity is attributed to a rise in both outright purchases and joint development agreements.

It’s common for buyers or sellers to conclude property transactions ‘off the books’ in cash to avoid taxes, effectively creating black money. While in the purchase of flats from a builder in a metro, the use of cash may have decreased, it is still very much intact in land and plot transactions or those of old family properties. Any time someone is looking for a property, an early conversation between buyer and seller is coming to terms on the ‘kachha-pakka’ or black-white ratio for the transaction.

For example, a property officially registered for Rs 70 lakh might have a total transaction value of Rs 1 crore, with Rs 30 lakh paid in cash. While the local authorities have fixed circle rates (minimum property value for registration) depending on the location, infrastructure, and facilities available, the actual market rates are often much higher, which creates opportunities for corruption to bridge the difference.

While answering a question in the Rajya Sabha in August, Minister of State for Finance Pankaj Chaudhary said the Income Tax (I-T) Department detected Rs 30,444 crore in undisclosed income (black money). In 2023-24, the I-T Department conducted 737 survey operations, which led to the detection of Rs 37,622 crore of undisclosed income. In 2022-23, during 1,245 survey operations, undisclosed income of Rs 9,805 crore was detected. Apart from black money, all operations yielded considerable assets.

Through a new study, LocalCircles has strived to find out if there has been any change in the last three years in the usage of black money in real estate. The survey first asked, “If you or your family bought a property (land, house, flat, shop, office, others) in the last 3 years, on average, what percentage of the value had to be paid in cash?” Of the 20,144 who responded to the question, 26% stated they had paid “over 50%” in cash; 19% of respondents stated they had paid “30-50%” in cash; 14% of respondents stated they had paid “10-30%” in cash; 7% of respondents stated they had paid “0-10%” of the transaction in cash; only 34% of respondents stated they had paid “none” of the transaction in cash. In essence, 2 in 3 of those who bought a property in the last 3 years had to pay a component of the price in cash; 26% of them paid over half of the amount in cash.

To speed up the process of property sale, complete with the documentation, many people end up paying bribes to various officials, mostly through middlemen with suitable contacts. The survey asked, “When you or your family sold or bought a property (land, house, flat, shop, office, others) in the last 3 years, how many agencies or individuals did you pay a bribe to?” Out of 19,814 who responded to the question, 7% stated “10 or more” individuals/agencies; 9% of respondents stated “7-9” individuals/agencies; 28% of respondents stated “5-7” individuals/agencies; 24% of respondents stated “3-4” individuals/agencies; and 32% of respondents stated “none” had to be paid a bribe to complete the process. To sum up, 7 in 10 who paid a bribe during the sale or purchase of a property in the last 3 years had to pay between 3-10 different agencies/individuals.

The LocalCircles survey received over 39,000 responses from citizens located in 301 districts of India. As many as 68 per cent of respondents were men, while 32 per cent of respondents were women; 44 per cent of respondents were from tier 1, 26 per cent from tier 2, and 30 per cent of respondents were from tier 3, 4, 5, and rural districts.