More than Rs 10,000 crore worth of real-estate transactions across five border states have come under the Income Tax Department's scrutiny for suspected under-reporting and other tax-compliance gaps, according to highly placed sources.
The transactions cover Uttar Pradesh, Rajasthan, Gujarat, Bihar and West Bengal and relate to FY25-26. The department has identified 14,743 property transactions with compliance gaps, including 2,552 transactions that were not reported.
In value terms, Rs 9,350 crore of the transactions relate to defective filings, while Rs 1,628 crore comprises unreported real-estate transactions. The department has also identified Rs 63 crore of unreported cash linked to property deals.
Uttar Pradesh accounts for the largest share of the transactions flagged, at Rs 4,081.27 crore. Rajasthan follows with Rs 2,694.62 crore, Gujarat with Rs 1,795.65 crore, Bihar with Rs 1,472.81 crore and West Bengal with Rs 554.15 crore.
The tax department has identified several types of compliance gaps, including non-reporting, incorrect reporting of PAN details and under-reporting of transaction values. It has also flagged transactions reported in the wrong fiscal year and cases where the cash component was not disclosed.
Cash Activity Exceeds Tax Base
The department's analysis also shows that cash activity is significantly higher relative to the tax base across the five states.
In Uttar Pradesh, the cash deposit-to-tax ratio stands at 21.38 times, compared with a pan-India benchmark of 2.5 times. Its cash withdrawal-to-tax ratio is 15.6 times, against 0.74 times nationally.
The cash-to-tax ratio measures cash deposits or withdrawals against tax paid. A higher ratio indicates that cash activity is larger relative to the tax base.
The same pattern is visible in the other states.
Assam has a cash deposit-to-tax ratio of 17.31 times and a cash withdrawal-to-tax ratio of 16.76 times.
In West Bengal, the two ratios stand at 10.38 times and 10.28 times, respectively. Gujarat records ratios of 10.27 times and 11.85 times, while Bihar records 7.63 times and 8.41 times.
All five border states are above the pan-India benchmark for both cash deposits and withdrawals relative to tax.
CBDT Plans Tighter Scrutiny
The findings come as the Central Board of Direct Taxes plans to strengthen its compliance framework in border regions, according to the sources.
The department plans to expand scrutiny at the district level and coordinate with the Reserve Bank of India, Securities and Exchange Board of India, Financial Intelligence Unit-India, Ministry of Corporate Affairs and Enforcement Directorate on high-risk cases.
It also plans to cross-check income-tax returns, tax deducted at source, specified financial transaction, banking and international data to identify discrepancies and cases that may require further action, the sources said.
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