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We will take action against ‘benami’ property. This is major step to eradicate corruption and black money… We are going to take action against the properties which are purchased in the name of others (benami). That is the property of the country. My government feels that it is our responsibility to help the poor and I will do it” said PM Modi on Nov 13, 2016  in Goa. This article answers what is Benami? What is Benami act? What is Benami property? How Benami Act will curb Black Money?

All About Benami Property

What is Benami?
Benami essentially means without a name, typically used for property. In this kind of transaction the person who pays for the property does not buys it under his/her own name. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner. The property is held for the benefit – direct or indirect – of the person paying the amount.
What assets comes under Benami transaction?
Assets of any kind ,movable, immovable(property), tangible, intangible, any right or interest, or legal documents. Even gold or financial securities could qualify to be benami.
How does Benami Transactions affect  people?
It is being done to curb on black money. If the transactions are legal, nothing to worry about. People with unaccounted income will sure have a tough time ahead.
What is Benami property?
Property that does not stick to the following criteria:
a) Property held in the name of spouse or child for which the amount is paid out of known sources of income
b) A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income
c) Property held by someone in a fiduciary capacity.
This means, by law, if you buy a property in name of your parents, too, can be declared as benami. The new legislation has provision of seven year imprisonment and fine, replacing the three-year jail term, or fine, or both.
What isn’t a Benami property?
1. Property held under the name of spouse or child, for which the amount is being paid through a known source of income.
2. A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income.
3. Property held by someone in a fiduciary capacity; that is, transaction involving a trustee and a beneficiary.

What is Benami Act?

Benami Transactions Prohibitions Act of 1988 states the following transactions within the premises of this law:

  1. Any transaction in which property is transferred to one person for a consideration paid or provided by another person.
  2. Property can be movable or immovable, tangible or intangible and includes any right or interest in such property.
  3. Transfer of property in the name of wife and unmarried daughter for the benefit of wife and daughter is excluded from the provisions.
  4. Transfer in the name of coparcener for the benefit of other coparceners for HUF and transfer to trustee for the benefit of trustor are excluded from the provisions.

The Benami Transactions (Prohibition) Amendment Bill, 2015, introduced in the Lok Sabha in May 2015 amended the Benami Transactions Act, 1988. The bill amended the definition of  benami transactions, establish adjudicating authorities and an Appellate Tribunal to deal with such transactions, and specify the penalty for entering into these. It empowers the government to confiscate benami property.

The New Benami Act came into effect from November 1 2016.  It prohibits illegal benami transactions, under which up to seven years of imprisonment and penalty for those indulging in such activities could be handed out. replacing the three-year jail term, or fine, or both.. Parliament had passed the Benami Transactions (Prohibition) Act, with the assurance from Finance Minister Arun Jaitley that genuine religious trusts would be kept out of the purview of this new legislation.
  • The Bill established four authorities to conduct inquiries or investigations regarding benami transactions: •
    • (i) Initiating Officer, • (ii) Approving Authority, • (iii) Administrator and • (iv) Adjudicating Authority 4
  • Initiating Authority -> Approving Authority=> Hold property for 90 days and Refer case to Adjudicating Authority.=> Administrator (To manage or appropriate)
  • Appellate Tribunal
  • Rigorous imprisonment of one year up to seven years, and a fine which may extend to 25% of the fair market value of the benami property.
  • Providing false information to be rigorous imprisonment of six months up to five years, and a fine which may extend to 10% of the fair market value of the benami property.
Benami Property Act passed in Aug 2015

Benami Property Act passed in Aug 2015

A presentation on Benami Transaction Act, 1988  on Slideshare
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