Yes, we all have heard Benami Act or Transactions from the people around us. But, only a few are aware of what exactly this act is all about, how things work under Benami Act and how it can impact you. So, without wasting a moment anymore, read this post further to get answers for all these common questions.
What is Benami Transaction?
Benami is a Hindi word that literally means “without name”. As the name depicts, in the world of real estate, the Benami transactions are those in which the property is purchased in the name of some other person, but the amount is paid by another. Any property, share, fixed deposits, bank accounts, which are held in a fictitious name, whose owner is unaware of such ownership or the person who is financing the property is untraceable are also a part of Benami transactions. The person, even if he/she is either fictitious or exist in reality is known as Benamidar. Usually, the intention behind Benami transactions is to evade taxation on black money.
What is Benami Act, 1988?
As it was seen that more and more people are dodging the government, hence Benami Transactions (Prohibition) Act, 1988 was passed by the Parliament of India. This act gave an unambiguous definition of Benami transactions and the punishment if anyone found guilty doing any such transactions. This act also allows the concerned authorities to confiscated the property and prohibit its recovery. However, the loopholes in the proper implementation machinery made the act practically useless.
What is Benami Transactions (Prohibition) Amendment Act, 2016?
Due to glitches in the Benami Act, 1988, the government introduces another bill that was passed in the Parliament and came into effect on 1st November 2016. This new bill was aimed to amend the current definition of Benami transactions. It also said to establish an Appellate Tribunal and adjudicating authorities to handle Benami transactions.
What are the Punishments for Violators?
Earlier, the violators were only liable for the imprisonment of three years, or fine, or both. Now, under the new Benami transactions act, anyone getting involved in evading tax via Benami transactions can face rigorous imprisonment of up to seven years or with the fine of around 25% of the fair market price of the Benami property. Also, if a person is found to furnish wrong information to the authorities can be imprisoned for five years along with a fine of up to 10% of the fair market value of the property. In addition to this, the government has right to prohibit recovery and confiscate the property without giving a single penny as compensation.
Why is an Appellate Tribunal Formed?
In the current Benami Act, an Appellate Tribunal is formed so that it can hear appeals against the orders given by the Adjudicating Authority. Whereas the appeals against the judgements of Appellate Tribunal will be entertained in the high court. An Appellate Tribunal will comprise of a chairperson and two other members. One of these two members shall be an administrative member and other shall be a judicial member.
Will it Help People?
The revised Benami Transactions (Prohibition) Amendment Act, 2016 was passed last year, after almost 29 years of its formation. It is undoubtedly a bold decision taken by the current government and is very stringent. The recent move in the form of demonetisation, Imposition of Tax Act, 2015 and amendments to the income tax laws are a prove that government has formed a strong barricade and it is going to be a tough road for corruptors to escape. The wave of optimism is flowing throughout the country and everyone is supporting the government’s regime against the eradication of black money. So yes, there is a very strong chance that this law can help people a lot in future.