Rs 1,000 cr NALA Tax evasion scam uncovered

A massive tax evasion scandal, involving over Rs 1,000 crore in outstanding Non-Agricultural Land Assessment (NALA) dues, has shaken the real estate sector in the erstwhile districts of Visakhapatnam, Vizianagaram, and Srikakulam. The scandal highlights a glaring disparity in tax enforcement, with allegations of preferential treatment for large-scale developers, many with ties to the previous YSRCP government, while individual homeowners face stringent scrutiny.
NALA tax is levied upon the conversion of agricultural land for non-agricultural purposes, a mandatory step for real estate development. Developers are accused of widespread underreporting of land areas in numerous projects, some spanning five to twenty acres, and circumventing established tax regulations. Disturbingly, building permits and occupancy certificates, which are legally contingent upon clearance of NALA tax liabilities, were reportedly issued despite these outstanding dues.
“It’s a clear case of unequal enforcement,” a source within the revenue department, speaking on condition of anonymity, told this publication. “While common citizens are held accountable for every rupee, large developers seem to have operated with impunity.”
Sources allege that during the previous YSRCP government’s tenure, influential political figures exerted pressure on officials to overlook these dues, facilitating the unchecked expansion of large-scale projects.
Many of these developments are reportedly linked to key YSRCP leaders, some of whom, despite facing penalties, have yet to settle their outstanding payments.
The current coalition government has acknowledged the issue and initiated discussions with real estate groups regarding potential reductions and future compliance. Visakhapatnam, particularly the Bheemili revenue division encompassing Madhurawada, Kommadi, and Endada, has witnessed a surge in real estate activity involving developers with YSRCP affiliations. Large residential projects in areas like Kapuluppada and Rushikonda have significantly contributed to the ballooning tax liabilities, which total crores of rupees. While some developers have made partial payments, others have resorted to legal challenges to avoid their dues.
One prominent project in Kurmannapalem, developed on 9.5 acres, should have incurred taxes in 25 installments. However, records suggest that only Rs. 1.5 crore was levied on 7.5 acres, raising serious concerns about deliberate underreporting. Despite incomplete tax payments, the project was completed and plots were sold. Currently, over 30 individuals owe more than Rs. 1 crore each in pending dues, with one large plot alone accounting for over Rs 300 crore in arrears. Outstanding NALA dues in the Madhurawada-Kommadi-Yendada region approach Rs. 300 crore, while the overall unpaid taxes exceed Rs. 800 crore, attributed to nearly a hundred defaulters.
“The scale of the evasion is staggering,” a senior government official commented. “We are committed to recovering every rupee owed to the exchequer.” Officials also pointed to a revenue department officer, previously embroiled in controversies during the previous administration, whose negligence has significantly hampered tax collection.
As the new government intensifies its efforts to recover these outstanding dues, the focus is on whether stringent measures will be implemented to hold defaulters accountable and recoup lost revenue. The real estate sector is closely monitoring these developments, anticipating a move towards greater transparency and adherence to tax regulations.