In an attempt to restrain the generation of black money in domestic market, the Government has introduced a bill to target Benami Transactions in real estate sector. The Parliament has already cleared the much awaited Black Money Bill to nab those stashing black money abroad. The Benami Transaction Bill aims to nab those enters in benami transaction to evade tax or to avoid payment to creditors, in domestic market.
The Benami Transaction (Prohibition) Act was first conceded in 1988 but had several loopholes and finally withdrawn. Later on, UPA 2 government introduced the bill in parliament but could not be become the act due to dissolution of the 15th Loksabha.
Finally, the NDA Government has introduced the Amended Benami Transaction Bill which got cleared by Loksabha and now headed towards Rajyasabha for approval.
Key Points of Benami Transaction Bill 2015
1. What does word Benami means?
Benami word is originated from Persia which means “No Name” or “Without Name”. In this benami transaction bill, the word benami is used to point out the transaction in which the owner of the property is not the actual/real beneficiary of the property.
2. What is Benami Transaction?
Benami Transaction means the transaction in which the person who pays for the property does not hold/own the property and the person who hold/own the property is not the one who pays for it.
In simple words the amount is paid by one person and the property is held by another person for direct or indirect benefit to the payer.
3. What will not be considered as Benami Transactions?
Following transactions are not considered as Benami Transactions and are excluded from the scope of the Benami Transaction (Prohibition) Bill, 2015:
- Property held in the name of the children or spouse through know income sources;
- Property jointly held with brother, sister or lineal ascendant or descendant for which the amount is paid out of known sources of income;
- HUF buying property in the name of the Karta;
- Property held by someone in fiduciary capacity such as a trustee, executor, partner or director of a company.
4. What is the nature of transactions which will be considered as a benami transaction?
Benami Transactions includes:
- Transactions which are carried out in bogus names; or
- Where the person who owns the property denies knowledge of the ownership; or
- Where the person who paid consideration for the property i.e. real beneficiary is not traceable or fictitious.
Further, Benami Transactions shall include assets (movable or immovable, tangible or intangible), any right or interest, legal documents, even gold or financial securities could qualify to be Benami.
5. Will Benami Property be confiscated?
The property involved in benami transaction could be confiscated as soon as the order of initiation of proceedings against the benami transaction is authorized by the competent authority.
6. What is the proposed fine or punishment under the Benami Transaction Bill?
The person found guilty may have to face rigorous imprisonment for a period not less than one year and which may be extended to maximum of seven years.
In addition to imprisonment, there would be a penalty of 25 percent which will be calculated on the fair market value of the property.
Further, any person who is asked to furnish any information under this act, if intentionally provides false information shall face rigorous imprisonment of not less than six months which may extend up to five years along with the fine of 10 percent of the market value of the property.
7. How will the market value be ascertained?
Market value of the concerned property would be taken as the value that property would fetch on sale in open markets or in any other case, help of the registered valuer will be taken.