The Income Tax (IT) Department has intensified its focus on circulation of black money in Nagpur’s booming real estate sector and is working to trace the flow, routes and methods through which unaccounted cash moves in the construction business. According to senior IT officials, the department has identified several builders who are allegedly running a major part of their business through unaccounted cash. “We are now trying to map the entire chain of black money generation and circulation, from land purchases to property sales, to identify the beneficiaries and those facilitating such transactions,” a senior official shared. The official explained that builders allegedly generate large amounts of black money at the very beginning of a project. Land is often purchased at the prevailing market price, but the sale deed is registered at the lower Ready Reckoner Rate (RRR).

 

The difference between the actual price and the registered value is allegedly paid in cash, creating a large pool of unaccounted money even before construction begins. Officials said this cash is then suspected to circulate through different stages of the project, including payments to contractors, suppliers and other business transactions, making the construction sector one of the most challenging areas for tax investigations. Rapidly developing localities such as Butibori, Kothewada, Besa, Beltarodi, Jamtha, MIHAN and Pipla, where hundreds of residential and commercial projects have come up in recent years, are among the areas being closely watched. Sources said the department believes search and seizure operations remain the most effective way to uncover concealed income in sectors dominated by cash transactions.

 

However, with only one or two major raids being conducted annually in the city in recent years, officials fear that a substantial portion of tax evasion may continue to remain undetected. The department is now strengthening intelligence gathering to identify the routes of black money circulation and tighten its surveillance on the real estate sector. “It is one of the most challenging sectors because every layer of the construction process has the potential to absorb cash,” another official asserted. He added that once the money moves through multiple contractors and suppliers, reconstructing the complete financial trail through data analytics alone becomes difficult, making search-and-seizure operations the department’s most effective enforcement tools in such cases. Department sources alleged that the cash generated during land purchases has subsequently been recovered from purchasers of flats and commercial units. Buyers have allegedly been making one payment through banking channels corresponding to the registered value of the property and another cash payment representing the difference between the registered consideration and the actual market price.

 

According to officials, the cash component has generally remained outside builders’ books of account, income tax returns, GST filings and banking transactions. Officials said this unaccounted money has then continued to circulate through almost every layer of the construction. Labour contractors have allegedly received substantial cash payments without corresponding tax deduction at source or formal employment documentation. Suppliers of steel, cement, sand, gitti and other construction materials have allegedly issued invoices for values lower than the quantities actually supplied, with the balance amount settled in cash. Similar payment patterns, officials alleged, have extended to electrical contractors, plumbers, tile suppliers, fabricators, painters and numerous other sub-contractors engaged in residential and commercial projects.