What is Benami Property – Benami Property Act:Increasing black money in India was exempting a large amount of tax due to which the government was suffering a lot of losses. To curb black money, the government made some amendments to the Benami Property Act on 1 November 2016. The Benami Property Act 1988 was passed, but the act did not benefit as much as it was thought. Amendments were made to increase the scope of the benami act, so that transactions from black money can be stopped. What is a benami property, which transactions will be considered as benami transactions and we will discuss the provisions of penalty and punishment for these transactions.
What is benami property: We can say benami property in simple words “without any name”. That is, if a person buys a property not in his own name, but in the name of someone else, but the benefits from that property will be received by himself, then such a transaction will be considered as benami transaction and such property will be considered as benami property. The person in whose name the benami property is purchased will be treated as a person nameless.
Apart from this, such transactions will also be considered as benami transactions in which one person gives cash to another and that other person buys a property in that name from that cash, but whose first person will get the benefit. Benefit from the property can be obtained in any form of Direct or Indirect. It is not necessary that the benefit is achieved right now, it can be achieved in future also.
Which property can be included in a benami property ?:
It is not necessary that only transactions from real estate will be included in the benami property. The property also includes all types of movable, immovable, touchable, untouchable, any interests or rights or legal documents. That is, if you have bought any shares in the name of another, then it will also be considered as a benami transaction.
Will a property purchased in the name of your wife or children be considered a benami property ?:
If the property is purchased in the name of your wife, children or relatives, it can also be a benami property, but the condition for this is that it is unknown source Have been purchased from That is, if you are buying a property from black money in the name of your spouse, children or relatives, then it will be considered a benami property. So if you buy a property in the name of your spouse or children, then it is important that you must show it in your income tax return.
Transactions which will not be considered as benami transactions:
Some transactions in which the property is purchased in the name of another will not be considered as benami transactions, such as –
The owner or member of the HUF (Hindu Undivided Family) to hold a property in its own name which is being used for the benefit of another member, then this transaction will not be considered as a benami transaction in the condition when the Consideration (return) for this transaction is HUF. Be given from Known sources.
Buying property from an known source of your income in the name of your spouse or children by an individual.
A person names a property in a Fiduciary (responsible person) capacity, Exp: – as a trustee, executor, partner of a partnership firm, or a depository.
A person buying a property in the name of his brother or sister or Lineal Ascendant or Descendant where that person is a Joint Owner, but such property is also purchased from Known Sources.
Penalty and Punishment:
The Benami Act provides for both penalty and punishment for the benami transactions. If a person who does an anonymous transaction, then
- A penalty equal to 25% of the property’s fair market value will be imposed.
- There is a provision of jail sentence for a minimum of 1 year and maximum of 7 years.
Further, if any person provides wrong notice to the officer during the inquiry, then
- Fines equal to 10% of the property’s fair market value, and
- There is a provision of jail sentence for a minimum of 6 months and maximum of 5 years.