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Introduction
Are you an NRI (Non-Resident Indian) planning to sell property in India?
If yes, there’s a good chance that a buyer has asked to pay part of the amount in cash. This is very common—and very tricky.
I often get questions from my NRI friends like:
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“Is it okay to accept cash?”
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“Everyone says I won’t find a buyer unless I agree to cash.”
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“Is it really that risky?”
In this article, I’ll explain why buyers offer cash, why sellers might feel tempted to accept it, and—most importantly—why you should avoid cash deals completely. I’ll also share safer ways to handle these situations.
Don’t let reading hold you back, Watch our video instead
Should You Accept Cash in a Property Sale?
No, you shouldn’t. Not if you’re an NRI.
Here’s the problem: once you accept cash, what do you do with it?
You can’t take it abroad without declaring it legally. That usually means depositing the cash in a bank. And that’s where things start to go wrong.
Unless you want to deal with black markets or use hawala (an illegal money transfer system), don’t even think about it. These options are illegal and come with serious risks.
But What If Buyers Push for Cash?
That’s a fair concern. Many buyers will suggest a cash deal.
Before you agree, you need to understand why they’re doing it.
Why Buyers Offer Cash
Here are the main reasons:
1. They already have cash from another property deal and want to reuse it.
2. Builders or real estate investors deal in cash regularly and want to pay part of the amount that way.
But the biggest reason is this:
To save money on stamp duty.
In India, stamp duty (which buyers pay when registering property) is based on the declared sale price. If the buyer shows a lower price and gives the rest in cash, they save 5% to 7%.
For example, if a property is worth ₹5 crores, and they underreport the price as ₹4 crores, they save ₹5–7 lakhs in stamp duty.
Some buyers also just want to use up unaccounted cash from previous deals.
So remember, their offer isn’t about helping you—it’s about saving money for themselves.
Why Sellers Are Tempted to Accept Cash
Let’s be honest—you might feel tempted too.
As an NRI, you’ll have to pay around 12.5% in capital gains tax when you sell property.
So if you sell your property for ₹1.5 crores, but only show ₹1 crore on paper and take ₹50 lakhs in cash, you pay tax only on ₹1 crore.
Sounds like smart tax planning, right?
Wrong. This is tax evasion, and it can get you into serious trouble.
What Can Go Wrong?
Here are the biggest risks of accepting cash in a property sale:
1. You Might Get a Tax Notice
Every property deal is registered with government systems. If your declared sale price is much lower than market value, it gets flagged.
This could lead to tax notices or a full audit.
2. Both Buyer and Seller Can Be Taxed Twice
Let’s say you receive ₹50 lakhs in cash.
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The buyer can be taxed, because this cash is seen as “income from other sources.”
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You, the seller, can also be taxed on the full market value—even though you declared less.
So both of you might pay tax on the same ₹50 lakhs.
3. Depositing Cash Is a Nightmare
If you try to put the cash in your bank, or split it between family members’ accounts, that just makes things worse.
Even if you spread ₹50 lakhs across 10 relatives, banks and tax authorities will ask where the money came from.
And what do you think your relatives will say?
They’ll point right back at you.
If any of them work in government jobs or have regular salaries, they might face problems too.
Can’t I Just Send the Cash Abroad Using Hawala?
No. Just don’t.
Hawala is illegal. It’s not a clever trick. It’s a crime.
You might think you’re saving money, but you’re risking:
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Legal trouble
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Financial penalties
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Losing your peace of mind
It’s simply not worth it.
How to Handle Buyers Who Want to Pay in Cash
So what do you do if a buyer insists on a cash deal?
Here’s how you can deal with it smartly.
1. Explain the Risk to Them
Tell the buyer:
“If you save 7% on stamp duty today, your registered purchase price will be lower. When you sell the property later, your capital gain will appear higher—and you’ll pay more tax.”
Example:
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Buyer pays ₹1.5 crores, but only shows ₹1 crore in the sale deed.
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Later sells for ₹2 crores.
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Now they pay tax on a ₹1 crore profit instead of ₹50 lakhs.
So, saving 7% now might cost them 12.5% or more later.
2. Offer a Middle Ground
Still facing pressure?
Try this:
“You’re saving ₹3.5 lakhs on stamp duty. I’ll cover half—₹1.75 lakhs—to keep everything legal.”
This way, they still save some money, and you avoid all the risk.
Conclusion:
If you’re an NRI and someone offers property sale plus cash, remember this:
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Stay away from cash deals.
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Use facts and logic to convince the buyer.
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If needed, offer to share stamp duty savings—but insist on a 100% legal transaction.