Benami property is PM Modi’s next target: Here’s all you need to know about it
After demonetization of high-value currency notes, Prime Minister Modi is all set to crack the whip on benami property holders.
After demonetization of high-value currency notes, Prime Minister Modi is all set to crack the whip on benami property holders. He has already hinted at this so many times and even today, making his last monthly address this year in his “Mann ki Baat” programme, he said that the government will soon operationalise a strong law to effectively deal with ‘benami’ properties, according to a PTI report.
It is still not clear what the PM’s next step will be against benami property, but in August this year itself, Parliament had passed the Benami Transactions (Prohibition) Act, and the rules and provisions of the Benami Transactions (Prohibition) Act came into force on November 1, 2016. The existing Benami Transactions (Prohibition) Act, 1988, was renamed as the “Prohibition of Benami Property Transactions Act, 1988”.
The Benami Act was passed with the intent of bringing unaccounted money into the system, as well as seizing benami property and prosecuting those indulging in such activities.
What is benami property?
In technical terms, ‘Benami Transaction’ means a transaction or an arrangement where a property is transferred to, or is held by, a person called ‘Benamidar’, and the consideration for such property has been provided, or paid by, another person. Such property is referred to as ‘Benami Property’.
Simply put, however, a benami property is basically property which lacks the official owner’s name. The property may be purchased in a family member’s name, and may not have been paid for by known income sources.
According to JLL India, cash-rich investors have in the past sought to park untaxed money in benami real estate transactions to circumvent the tax authorities while simultaneously reaping sizeable returns on investments. However, “with the passing of this amended Bill, there will be no way to avoid adding the proper name to a purchased property. This will bring in more transparency into the sector, minimize title risks and boost buyer confidence with regards to residential property transactions,” says Anuj Puri, Chairman & Country Head, JLL India.
The gist of new legislation of Benami Act:
According to international law firm India Juris, the PBPT Act defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine. The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner. Properties held benami are liable for confiscation by the government without payment of compensation.
The gist of new legislation of Benami Act is highlighted as below:
* In case of the offence of benami transaction, the guilty person shall be punishable with rigorous imprisonment for a term one to seven years and shall also be liable to fine up to 25 percent of the fair market value of the property.
* Every suit or proceeding of a benami transaction pending in any Court (other than a High Court) or Tribunal or before any forum on the date of the commencement of this Act shall stand transferred to the Adjudicating Authority or the Appellate Tribunal, as the case may be, having jurisdiction in the matter.
* If any person gives false information to any authority or furnishes any false document in any proceeding under this Act, shall be punishable with imprisonment for a term 6 months to five years and shall also be liable to fine which may extend to ten percent of the fair market value of the property.
* The Central Government may also appoint a Special Public Prosecutor.
* A Public Prosecutor under this Act shall be in practice as an advocate for not less than seven years, and the Special Public Prosecutor shall be in practice as an advocate for not less than ten years in any court.
* The Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of an offence punishable under this Act, by notification, designate one or more Courts of Session as Special Court or Special Courts for such area or areas or for such case or class or group of cases.
* The Special Court shall not take cognizance of any offence punishable under this Act except upon a complaint in writing made by the authority; or any officer of the Central Government or State Government authorized in writing by that Government by a general or special order made in this behalf.
* Every trial shall be conducted as expeditiously as possible and every endeavour shall be made by the Special Court to conclude the trial within six months from the date of filing of the complaint.
* The Central Government shall establish an Appellate Tribunal to hear appeals against the orders of the Adjudicating Authority under this Act.
* The Appellate Tribunal shall consist of a Chairperson and at least two other Members of which one shall be a Judicial Member and other shall be an Administrative Member.
* Any benami property shall be liable to be confiscated by the Central Government.
* Benamidar shall not re-transfer the benami property held by him to the beneficial owner or any other person acting on his behalf.
Stringent Punitive Measures Laid Down:
The Bill, thus, seeks to change the earlier penalty of one to three years to rigorous imprisonment of one year up to seven years, and a fine which may extend to 25% of the fair market value of the benami property. “We will hopefully see a much-needed cleansing in the real estate sector. The success of the amended bill will lie in its quick and strict implementation by the empowered authority. Else, the mystery of true ownership will remain unsolved,” says Puri.