Will Aadhaar linkage reduce benami property transactions?

With the government of India hinting at its intention to link Aadhaar numbers with property transactions, several analysts have hailed the proposed move as a game-changer, while others have questioned its intent, its chances of success, as well as the constitutional validity of such a move. To understand whether the linking of Aadhaar number with property ownership, will actually lead to a transparent property market, we need to look at some basic questions:

Table of Contents

How far is the biometric system a foolproof mechanism?
How will the linking of Aadhaar with properties curb the use of black money, which is directly related to benami transactions?
What can Aadhaar linking achieve, which PAN linking could not?
Can the government monitor transactions between two private parties in the secondary market?
Will Aadhaar linking deter investors and hence, cripple real estate transactions further?
How will the government deal with data confidentiality concerns?

The government could reason that linking property transactions with Aadhaar, will ensure that all parties to the deal are present in their individual capacity and the possibility of using fake identities is virtually ruled out. Section 139A of the Income Tax Act, 1961, states that no person shall have more than one PAN card. However, as PAN was not linked with biometrics, one person could have multiple PAN cards, thereby, keeping multiple identities. It has been argued that when biometrics are already taken for passports and foreign visas, its applicability to property transactions is a logical step forward. With Aadhaar linkage, the illegal practice of persons having multiple PAN cards and fake passports, will end. Each person will be individually identifiable in a property transaction and the practice of using benami entities may end.

Aadhaar in real estate: Not a foolproof system, say home buyers

However, many home buyers fear that Aadhaar biometrics could pose a serious problem, in the absence of technology backing it holistically. Rajeev Goswami, a home buyer in Noida, recalls how a skin infection meant that his fingerprints did not match, while linking his mobile number with his Aadhaar. How could it be different with property, he wonders. “I suffer from palm psoriasis, which was not the case when I got my Aadhaar number a few years back. If I go for a property registration today that requires Aadhaar-based fingerprint identification, my skin condition would pose hurdles. Even if I get it done with my present condition, I am not sure what will happen tomorrow, if I wish to sell my house and my skin condition improves or worsens. It is definitely not a foolproof system and it can cause problems for average home buyers,” says Goswami.

A section of critics even point out that benami properties are not the real challenge for the economy. According to them, the real problem is the black money in the sector. The genesis of this black money is the mismatch between the reported price (and circle rate) and the actual market price. Hence, they argue that the government should first streamline its own structural flaws.

Linking Aadhaar with property transactions: The legal view

Aditya Pratap, advocate-on-record with Bombay High Court, points out that the government should also amend the UIDAI Act, to incorporate the new measures. The UIDAI Act, in its current form, makes Aadhaar mandatory only for availing of government subsidies and benefits. A person buying property is doing so in a private capacity. As he is paying money to the exchequer by way of stamp duty, he cannot be said to avail of government subsidies and benefits, Pratap explains.

“To unilaterally impose Aadhaar, may amount to going ultra vires of the UIDAI Aadhaar Act, 2016. The action of the government in imposing Aadhaar on every aspect of life is, prima facie, beyond the scope of the act and hence, is illegal. Further, Section 3 of the UIDAI Act gives any resident of India the right to obtain an Aadhaar number. It does not make Aadhaar compulsory. Therefore, by making Aadhaar compulsory through various means, the government’s actions may be hit by the doctrine of colourable legislation, which states that ‘what you cannot do directly, you cannot do indirectly’,” says Pratap.

Even under the Registration Act of 1908, property-related transactions are always in the public domain. Section 57 of the Registration Act, 1908, clearly states that any person can inspect the books of registration, by paying nominal fees. They can also take certified copies of extracts. Therefore, whether Aadhaar linkage is there or not, property transactions have to be in the public domain. Hence, while Aadhaar linkage will prevent the usage of fake identities, the bigger issue in the real estate market is not who owns the property but how much black money is being routed into the sector. Whether Aadhaar linkage can address this, remains uncertain.

Aadhaar linkage and concerns

The government wants to monitor large-value transactions like real estate, by linking it with Aadhaar numbers.
Home buyers remain concerned about safety measures to avoid leakages and tampering of their personal data.
While Aadhaar linking can check benami transactions to some extent, it cannot bring about a clean and transparent ecosystem, without digitisation of land records and measures to curb black money.
Right to property is a constitutional right, under Article 300A of the Constitution of India. With Aadhaar linking, while the government will know about your transactions, it cannot interfere with your ownership rights in any manner.

(The writer is CEO, Track2Realty)

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Ravi Sinha

Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.

Twitter: https://twitter.com/ravitrack2media