Central Govt asks States to explore possibility of using consent-based Aadhaar to track benami properties

The great Indian clean-up began with the bold step of demonetization. Overnight, hoarders of black money were put in a spot. While some thought and still think they can escape, the Income Tax Department is hot on the heels of suspicious cases. 18 lakh odd depositors have been contacted by the Income Tax Department under Operation Clean Money. Further the 1.16 lakh odd depositors have received notices from the Income Tax Department based on their demonetization data.

Next, came the introduction of the Goods and Service Tax. While the main intent of the Act was to unify the country into one market by ending multiple taxes, its processes have been designed in such a way that generating black money is no longer as easy as it used to be. Further, the Government now plans to use GST data to track Income Tax defaulters.

In the midst of these reforms, a chorus was sounded by critics who had professed their new found love for cash, and had urged the Government to go after the “real” source of hidden wealth: Real Estate sector. The demand was valid since most of the black money in the form of cash, was eventually pumped into real estate.

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Last month, when Prime Minister Modi was speaking at an election rally in Sundernagar, he had given a hint that the Government would now be coming after “benaami” properties. The Union Housing and Urban Affairs Minister Hardeep Singh Puri was even more forthcoming in his statement. Soon after PM Modi’s statement, Puri stated that seeding Aadhaar to property transaction was a great idea. But he clarified that his ministry would not make any announcement on this yet.

In the current Lok Sabha session, Congress MP from Karnataka, D K Suresh, raised a question to Puri, asking about the same. He asked whether it was true that the Central Government had proposed to make Aadhaar linkage with property transactions mandatory. He also asked whether any study had been conducted on the pros and cons of the move, and whether any time frame was fixed.

In his reply, Puri stated that there was no proposal to make Aadhaar linkage mandatory in property transactions. This was reported by many media houses, based on a PTI copy:

Although the headlines were accurate, they did not do full justice to the actual reply of the minister. The minister’s full reply reads as below:

No, Madam, at present there is no proposal to make Aadhaar linkage mandatory in property transactions. However, to prevent and identify benami or fraudulent transactions, the State Governments and Union Territories have been advised by the Department of Land Resources, Ministry of Rural Development to explore possibilities to use consent-based Aadhaar authentication for registration under the provisions of Registration Act, 1908.

The minister makes it clear that the Central Government has no proposal to make “aadhaar linkage mandatory” for property transactions. But, he adds that the Department of Land Resources, Ministry of Rural Development, which comes under the Central Government, has advised states to find means to use “consent based Aadhaar authentication”. The purpose of this, as stated by Puri, is to prevent and identify benami or fraudulent transactions. This part of the reply was quoted by media reports, but the headline focused on the earlier part of the reply.

This second part is significant since although the Government has said that it will not mandate any compulsory Aadhaar linking, states have been told to devise means to use Aadhaar authentication to identify benaami properties. The term “consent based Aadhaar authentication” is also ambiguous and it will have to be seen exactly what sort of framework states devise. Nevertheless, it is fair to say that Aadhaar linkage to detect benaami properties is coming soon, it just may not be mandatory.

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