The government passed a new Benami Transactions (Prohibition) Amendment Bill in 2015. It aims to catch those who channelise their black money into real estate illegitimately. Here are few things you should know.
What is a Benami transaction?
What constitutes Benami property?
Property that does not stick to the following criteria:
a) Property held in the name of spouse or child for which the amount is paid out of known sources of income
b) A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income
c) Property held by someone in a fiduciary capacity
This means, by law, if you buy a property in name of your parents, too, can be declared as benami.
Who initiates proceedings against alleged Benami property beneficiaries?
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.
What happens to a Benami property?
After an order becomes final, the property or properties in question will be confiscated. These will be managed and disposed of by designated officers, who will be appointed from among income-tax officers.
What is the punishment?
Benamidar, or the beneficial owner or any other person who abets any person to enter into such a transaction, will face rigorous punishment ranging from a year to seven years in jail.
How much is the fine?
These persons will be liable for a fine of up to 25% of the fair market value of the property
How will the fair market value be determined?
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.