The Benami Transactions (Prohibition) Amendment Act, 2016, designed to curb black money and passed by parliament in August 2016, came into effect
What is benami property?
The benami (without a name) property refers to property purchased by a person in the name of some other person. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner.
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
What is Benami Transaction (Prohibition) Act, 1988 about?
- The Act prohibits benami transactions and provides legal provisions for confiscating benami properties.
- It defines a benami transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person.
What will Benami Transactions (Prohibition) (Amendment) Act, 2016 do?
Amendment seeks to strengthen Benami Transaction (Prohibition) Act, 1988 by:
- Amend the definition of Benami transactions to widen the scope for legal action
- Specify penalties for entering into Benami transactions and
- Establish adjudicating authorities and Appellate Tribunal to deal with Benami transactions
- The Bill provides immunity under the Benami Act to those who declare their benami properties under income declaration scheme
- Under the bill, the term “property” will cover movable, immovable, tangible and intangible properties. In case of joint ownership of property, the tax payer will have to show financing sources
Key Highlights Benami Transactions (Prohibition) Amendment Act, 2016
- Persons indulging in benami transactions may face up to 7 years’ imprisonment and fine.
- Furnishing false information is punishable by imprisonment up to 5 years and fine
- Properties held benami are liable for confiscation by government without compensation
- Initiating Officer may pass an order to continue holding property and may then refer case to Adjudicating Authority which will then examine evidence and pass an order.
- Appellate Tribunal will hear appeals against orders of Adjudicating Authority. High Court can hear appeals against orders of Appellate Tribunal.
Why these amendments are needed?
- To effectively prohibit Benami transactions and consequently prevent circumvention of law through unfair practices
- To empowers the Union Government to confiscate Benami property by following due procedure
- The Benami Transactions (Prohibition) Amendment Bill is aimed at curbing domestic black money.