December 13, 2016
The government passed the Black Money Act to nab those with undisclosed foreign income, then offered income declaration schemes, and then demonetization. Each move is aimed to check tax evaders. The next area of focus of the government's crackdown on illegal wealth is likely to be benami properties.
December 13, 2016
The government passed the Black Money Act to nab those with undisclosed foreign income, then offered income declaration schemes, and then demonetization. Each move is aimed to check tax evaders. The next area of focus of the government's crackdown on illegal wealth is likely to be benami properties.
The Prohibition of Benami Property Transactions Act, 1988 (PBPT Act) came into effect from November 1, where up to seven years of imprisonment and penalty for those indulging in such activities could be handed out.
Benami Act
Benami Act was already there in the statute, so what's new and how government can take action now?
The government is equipped with information flowing from within and outside of the country through Annual Information Reports being furnished by the banks, mutual funds and other financial institutions as well as from other countries through strengthened Exchange of Information clause and automatic exchange of information starting 2017. With free flow of information from all the sources, government shall have the much needed teeth to kill the menace of black money.
First, some basics
Benami property is a property which is legally held in the name of a particular person known as the benamidar, but actually belongs to another person who has paid for it and continues to hold beneficial interest in the said benami property.
You are safe if the benamidar is a family member. So, if the property is acquired out of known sources and held in the name of a family member, the same shall not be tagged as benami property. But remember, for a property held in the name of brother, sister, lineal ascendant/descendent, you should be named as a joint owner of the property.
What's different in the law
Though the law was in place, due to lack of implementation tax evaders were going scot-free. With the new Benami Act, a comprehensive implementation mechanism has been put in place and if you indulge in such transactions you are sure to be punished. Under the amended Act, the Initiating Officer has the power to enquire into any person, place, documents or property in the course of investigation into any matter related to a benami property transaction.
The seven years imprisonment won't be limited to the beneficial owner of the benami property, i.e., the tax evader; even benamidars and others involved in the benami transaction won't be spared. Also, a fine of up to a maximum of one fourth of the market value of the property can be imposed on all parties involved.
Escape routes closed
All domestic benami transactions conducted since 1988 shall fall under the purview of the amended PBPT Act. Re-transferring the property to the beneficial owner won't undo the impact and the re-transfer shall be construed as invalid and the benami transaction shall remain punishable. So, those considering re-transfer as an escape route, need to think again.
Courtesy: Financial Express
