As per the new provision passed
by the Government of India on Benami Property, a person not buying a property
in her/ her name, rather financing the property in some other’s name will be
termed as “benamdar” and the possession of such property will be termed as
“benami property”.
Benami Property Transaction Act 2016
is a further amendment of Benami Property Transaction Act 1988 which is again
re entitled as Prohibition of Benami Property Transaction Act 1988 (PBPT). The amendment
act came into force on 1st November 2016.
Violation of Rules as per Benami Act
will invite severe punishments including seven years in jail and a hefty fine
for offenders. The punishment is similar to that awarded for heinous crimes
such as dowry death and robbery or dacoit.
Ill-gotten properties can also be confiscated under the Benami law.
Ill-gotten properties can also be confiscated under the Benami law.
Once found holding under Benami
Property, he/ she may not a chance to appeal or an acceptance of a counter
claim. Property in general is confiscated without any Compensation from the
exchequer.
Various Ministers of finance, Dept. OF
Income tax & other depts. have been notified to exercise the powers of the
Approving Authority, Initiating Officer and Administrator, respectively.
What
falls under benami transaction?
● Assets of any kind
— Movable, immovable, tangible,
intangible, any right or interest, or legal documents. As such, even gold or
financial securities could qualify to be benami where the owner of the assets
is different than the person who has paid for it & often done to circumvent
applicable taxes.
Some of the near term implications of
this may entail:-
a)
Plan the distribution of wealth and relinquish such
properties where the owner and registration are in different names because of
the penalty and the punishment it may attract.
b)
Proper documentation and clarity on legal ownership of
properties will undoubtedly help weed out the unscrupulous players from the
market
c)
With Increased transparency, property title risks may get
reduced with buyers getting more confident to close the Property buy/ sell.
d)
Lending institutions will have more confidence as they
would be able to finance the project at a lesser lending rate
e)
Recent IDS is an opportunity to declare all belongings i.e.
all assets whether income accruing or not to the income tax authority. Post this,
it may be subject to scrutiny and may have even more stringent repercussions.
f)
Prepare a statement of affairs for almost every PAN in terms
to match assets & liabilities. Though currently, there is no mandate to
submit the balance sheet with returns, may help as good practice and a base for
verification for any third party entities like banks, financial institutions and
legal aspects
g)
Fictitious valuation or Wrong Declaration may often lead
to stringent provisions and with this act, perhaps can be curbed to a large
extent with new Benami Property Act.
