2 in 3 homebuyers admit paying in cash, bribes still rampant in real estate deals: LocalCircles survey

Hyderabad: Black money and corruption in the estate sector in India manifest in various ways. This is seen in 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.

Black money and convoluted bureaucracy

Despite government initiatives to link Aadhaar with property for maintaining digitised records, promoting transparency through digital payments and streamlining the 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. Also, countering government policies, the process of buying and selling property remains intertwined with bureaucratic hurdles and high transaction taxes.

How much percentage of property deals involve undisclosed cash?

“Up to 50 per cent of high-value property deals involve unreported cash, evading taxes and inflating prices,” said Dr Rakesh Verma, a former bureaucrat, in a policy paper, as stated in a LocalCircle survey on understanding property transactions among Indians.

In the report ‘Addressing Inflated Real Estate Prices in India – Tackling Corruption, IAS Involvement, and the Role of Big 4 False Reports’, published on LinkedIn, Verma states that the regulatory inefficiencies, like the need for 40–70 approvals, create bottlenecks, thereby fostering corruption and increasing costs, which are passed on to buyers.

Indian realty on the rise

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, as stated by a LocalCircles survey.

This surge in activity is attributed to a rise in both outright purchases and joint development agreements.

Understanding black money transactions

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.

Rs 30,444 crore in black money

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.

2 in 3 of those who bought a property had to pay some in cash

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.

Paying bribes to multiple agencies

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.

Extent of survey

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.