Benami Property has been one of the most discussed points after every reform/bill introduced by the Government, including the most famous ones – Demonetization, RERA Act, and GST.
For those of you living under the rock here is what Benami Property is all about –
Benami is the Hindi term with the meaning no name. So, any property (residential, commercial) which has been bought by an individual not under his or her name is a benami property. It could include properties held in the name spouse, child for which the money is paid from known sources of income. Further, a joint property venture with brother, sister or other relatives for which the amount is paid out of known sources of income also falls under benami property. The transaction involved in the same is called benami transaction; it was a usual practice to evade taxation.
However, recently in Mann Ki Baat by PM Mr. Narendra Modi it was mentioned that all cases concerning Benami Properties and Benami Transactions will be strictly dealt with.
Here are the three must-know things for benami property owners –
- Exclusion of Benami Transactions – To curb the number benami properties and benami transactions the government has now decided that any such properties shall be liable to be confiscated by the central government. No benamidar shall transfer such a property to the beneficial owner or to another person acting on his behalf; however, if this happens to be a case the transaction will be considered null and void.
- Attachment, Negotiation and Confiscation – If the Income Tax officer visiting the property believes that any person is a benamidar of a certain property, he is authorized to record the reasons in writing, issuing a notice to the person to show within the stipulated time why the property shouldn’t be considered benami property. If the identity of the beneficial is known a notice shall be served to him too. Also, if the IO is of the opinion that the person holding such property may estrange the property within the period of notice he may as well provisionally attach the benami property for a period not exceeding 90 days from the date of notice.
- Offences and Punishments – The beneficial owner, benamidar, and/or any person to enter into any form of benami transaction shall be held guilty of offence of benami transactions. Such a person shall further punishable with an imprisonment of at least one year which may extend to seven years. A fine of 25% of the Fair Market Value of the property may also be imposed. Another important thing is that if any person who is required to provide information under this Act provides wrong information out of his intention, then he too shall be punishable with a rigorous imprisonment for at least 6 months which may extend to 5 years. Such a person may also be required to pay a fine which may extend to 10% of the FMV of the property.
These three points mentioned above are the ones that the owners of benami property/s should consider.
Got some help?