Realty likely reason for Hyderabad's top slot

Had the finance ministry shared the details of the average ticket size of these disclosures, the picture would have been much clearer: Cherukuri Kutumba Rao

Hyderabad has topped a list of cities in terms of black money disclosures, sources said.

The city has established a dubious distinction as being the least tax-compliant city, said Cherukuri Kutumba Rao, vice-chairman of the Andhra Pradesh State Planning Board and a chartered accountant.

Had the finance ministry shared the details of the average ticket size of these disclosures, the picture would have been much clearer, said Rao. “But something is basically wrong here,” he said, while expressing strong suspicion the real estate and construction sectors and the hawala business were the top sources of black money generators in the city.
 

"Hyderabad is a strategic hub for real estate and construction companies, contractors and IT (information technology) sectors. As IT companies have no compulsion to suppress income, the usual suspicion falls on real estate and construction. I suspect that a booming hawala market could also be one of the major sources of black money in the city,” Rao told Business Standard. Indications of high levels of black money have been present for a while as Hyderabad had become one of the top five cities in terms gold purchase, Rao said.

Experts said the cost of converting black money into accounted cash using shell companies would be 8-15 per cent at the broker level. An additional 30 per cent income tax is levied after conversion. "The government’s decision to levy 45 per cent tax on black money is almost in line with the cost to convert black money. In a way, the Centre's plan to unearth black money has worked well," a person who has knowledge about such financial transactions said on condition of anonymity.

An industrialist with interests in energy and infrastructure said no one with an operating business might go for such voluntary disclosure schemes as they can show that income as profit in the balance sheet.

“Only those in trading, or people in a profession like politics who cannot themselves disclose the black money but would do so in the name of others could have disclosed the black money under the scheme."