So, a property bought by an individual not under his or her name is benami property. The person on whose name the property is purchased is called benamdar. The benami transactions include buying assets of any kind — movable, immovable, tangible, intangible, any right or interest, or legal documents.
What are the laws against benami properties?
The first act against benami properties ws passed in 1988 as the Prohibition of Benami Property Transactions Act, 1988. A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income also falls under benami property. As a usual practice, to evade taxation, people invest their black money in buying benami property. So after further amendment, Benami Transactions (Prohibition) Amendment Act, 2016 came into force on November 1, 2016. To curb black money, the Modi government in July 2016 decided to amend the original act. Since the percentage of tax payer in the country is a dismal low, the government fails to successfully implement its policies and schemes due to lack of resources. The PBPT Act defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine. The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner. A tough law against benami properties is the need of the hour to check corruption. It can include property held in the name of spouse or child for which the amount is paid out of known sources of income. Properties held benami are liable for confiscation by the Government without payment of compensation.
Affect of benami transactions on people and need for tough law
Rather than hoarding the black money in cash, the tax evader invest their accumulated illegal money in buying benami properties. The whole process affects the revenue generation of government hampering growth and development of the state. The transaction involved in the same is called benami transaction. The real owner of these properties are hard to trace due to fake names and identities. Benami in Hindi means without name.