Benami Act ?
What is benami Act?
First, a benami transaction is one where a property is held by one person and the amount for it is paid by another person. Therefore, in a benami transaction, the name of the person who paid the money is not mentioned. Directly or indirectly, the benami transaction is done to benefit the one who pays.
What isn’t a benami transaction?
1. Property held under the name of spouse or child, for which the amount is being paid through a known source of income.
2. A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income.
3. Property held by someone in a fiduciary capacity; that is, transaction involving a trustee and a beneficiary.
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.
How it affects the people?
It is being done to curb on black money. People with unaccounted income will sure have a tough time ahead. As for the general public, it won’t be much of an issue if their transactions are legal.
New Benami Law to come in effect from November 1
The Benami Transactions (Prohibition) Amendment Act came into force on November 1, 2016, the Central Board of Direct Taxes said .
Following this, the existing Benami Transactions (Prohibition) Act will be renamed as the Prohibition of Benami Property Transactions Act (PBPT Act).
The PBPT Act defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine,” the official notification said.
“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.”
According to the new law, people caught with ‘benami’ properties could serve up to seven years of rigorous imprisonment and have to pay a significant fine.
Additionally, the properties will be confiscated. Under the Act, a transaction is named ‘benami’ if property is held by one person, but has been provided or paid for by another person.
A person could also face rigorous imprisonment for up to five years for knowingly giving false information and will have to pay a fine of up to 10 per cent of the market value of the property.
The PBPT Act provides for the creation of an appellate mechanism called the Adjudicating Authority and Appellate Tribunal.