All You Need To Know About Benami Transactions Amendment Bill, Which Intends To Tackle Black Money
August 26th, 2016
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The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha and the Bill seeks to amend the Benami Transactions Act, 198 which prohibits benami transactions and allows confiscation of benami properties. The Bill intends to amend the definition of benami transactions and establish adjudicating authorities besides defining penalty for entering into benami transactions.
Who is a Benami?
Benami literally means “no name”. It is a transaction in which the real beneficiary is not the one in whose name the property is purchased. As a result, the person in whose name the property is purchased is just a mask of the real beneficiary.
The purpose of the ammendment?
The Act is amended with an aim to prohibit Benami transactions, meaning, all real estate transactions shall be in the name of the actual owner who is paying the consideration from his known sources.The benami bill is part of the efforts to tackle the menace of Black money. This is in addition to Income Disclosure Scheme where a disclosure window is offered ending September 30 to come clean by paying 45 per cent tax and penalty. The proposed amendments of Benami Transactions (Prohibition) Act is expected to enhance transparency in ownership of property. In the long run and instilling professionalism. This together with Goods and Services Act (GST), Real Estate Regulation Act (RERA) and Land Digitisation is expected to have a good impact on the menace of black money, tax collection and economy on the whole.
What is the penalty for the guilty ?
The penalty for entering into benami transactions is imprisonment up to three years, or a fine, or both. The Bill seeks to change this penalty to rigorous imprisonment of one year up to seven years, and a fine which may extend to 25% of the fair market value (It will be a price that the property would ordinarily fetch on sale in open market. In cases where the price is not ascertainable, another procedure will be prescribed) of the benami property.
Other important features of the bill
An assistant or deputy income-tax commissioner, designated as initiator by the government, will be authorised to start proceedings into an alleged benami transaction. The officer will refer the case to an adjudicating authority (which will be set up). The authority will decide within a year if the property is benami. The Bill provides for an appellate tribunal, too.