Benami Property Act comes into force
New Delhi: The Benami Property Act has come into effect. The existing Act will be renamed ‘Prohibition of Benami Property Transaction Acta�� and its violation will entail seven years of jail term.
The Income Tax department promised last Friday to bring into force the Benami Transactions (Prohibition) Amendment Act, 2016, from Tuesday. With that, the existing Benami Transactions (Prohibition) Act, 1988, is to be renamed as the Prohibition of Benami Property Transactions Act (PBPT).
The Benami Transactions (Prohibition) Amendment Act, as the name suggests, prohibits all ‘benami’ properties, which are held by one and paid for by someone else. The amendment has been enforced to make the existing law stricter.
“The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner,” the official notification said. “Properties held benami are liable for confiscation by the Government without payment of compensation.a�?
The existing law provided up to three years of imprisonment and/or fine, but as per the amended Act, violation could be punishable by up to 7 years of imprisonment plus penalty.
The law also stipulates a fine of up to 10 per cent of the market value of the property for those providing false information knowingly.
Parliament passed the Benami Transactions (Prohibition) Act in August this year to curb the menace of black money. Finance Minister Arun Jaitley assured that genuine religious trusts will be kept out of the purview of the Act.
Any asset — whether movable, immovable, documents, financial, etc — which does not have valid documents naming the person who paid for it is considered benami. Both parties indulged in a benami transaction — the illegal named owner and the payer — can be held responsible.
In case of a property held under the name of spouse or child, which is being or has been paid for by a known source of income would not be counted as benami. Same thing applies to a joint property held by siblings, parents, or other family members. A property transaction involving a trustee and a beneficiary would also not fall under the benami category.