Benami Property is the popular word today. We keep on hearing this word very often but do we really know the meaning of Benami Property and implication of holding benami property. In this post, we will discuss what is benami property? What is prohibition of benami property act? How benami property act will eradicate black money?
What is Benami Property?
An actual meaning of benami is without any name. Benami Property means property purchased on the name of someone else. In simple terms suppose you want to purchase a plot. However, when you are making a purchase, you are not purchasing a plot on your name. You are purchasing this plot on the name of close relative say your brother. The property purchased like this will be called as a benami property. The holder of the property is known as benamidar.
These types of properties are generally purchased for the direct or indirect benefit of a person paying money for the purchase. Few examples of property falling under benami category are given below.
- A property purchased on the fictitious name.
- The owner of property is missing or not traceable.
- The property owner defined on paper does not know about the transaction.
- The money is paid from undisclosed income (black money) and PAN card number is not mentioned.
- Incase if beneficiary and owner of a property are not same.
What are the exclusions for the benami properties?
There are some exclusions for the benami properties. These exclusion includes –
- If the property is purchased in the name of wife or on the name of unmarried daughter, it is not benami property.
- If a property is jointly held by a wife or other relatives with known source or fund it is excluded from benami properties.
- If property is already declared under Income Declaration Scheme – IDS 2016.
- In case of HUF, if head of HUF or Karta decide to buy a property for the benefits of all trustees.
- Charitable or religious properties are excluded.
How Benami Property will be identified?
In order to identify benami properties, authorities consider following factors.
- Authorities will look at the source of fund used for making purchase of property. Tax on this fund is paid or not.
- If the property is purchased on someone else name what is the purpose behind buying the property.
- The authority will find out who is holding a document of the property.
- If you are earning any income from this property you have declared this income in your return or not.
- The authority will also assess that actual possession of the property is with whom.
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What is prohibition of benami property act?
In order to curb this malpractice “Prohibition of Benami Property Act” was formulated and strict provisions are made. This act is in force from 1st November, 2016. As per this act following action can be taken against benami properties and benami property holders.
- As per act property identified as benami can be seized by the government without any compensation or payment.
- Up to seven years of jail and fine up to 10% of the fair market value of property.
- Five years of jail and fine for furnishing incorrect information.
- An appellate mechanism has been provided in terms of adjudicating authority and appellate tribunal.
You can find more information about prohibition of benami property act from here.
Over to you –
Holding a Benami property is a crime against the nation. If you are holding these types of property get ready for the penalties and imprisonment including loss of property.
This step is taken to eradicate black money. People with black money will sure have a tough time ahead.
You need not to worry if you have already declared your income or asset in IDS 2016 or you are not holding any benami properties.
Do share your views in the comment section.