Benami Transactions (Prohibition) Amendment Bill is going to be tabled in the monsoon session of Parliament commencing on July 18. The bill will seek to effectively amend the definition of ‘Benami transactions’ mentioned in the Benami Transactions (Prohibition) Act, to include transactions made in fictitious name and to grand exceptions if the benamidar is spouse/children or a member of Hindu Undivided Family.
The act was formed in 1988 and is not operational following many manufacturing defects while placing it. The new amendment is intending to rectify all the loop holes of the Act. However, the act had been tabled last year before the Parliament but didn’t successfully come out of it. Benami Transactions are reportedly one of the major sources of black money in real estate sector. The bill should effectively curb the black money flow and make it difficult to those try to defeat the land ceiling laws.
Benami Transactions: What does it mean?
The term ‘Benami property’ means a property purchased by an individual in the name of an apparent owner. The property will be financed by the later, but registered in the name of another person. The person under which the property is registered is called benamidar and such kind of property is known as Benami property.
The first type of Benami transaction is of an innocuous nature, say for example, a father/husband buying a property under the name of his daughter/wife considering the emotional background. In this case, the intention is to transfer the ownership of the property genuinely to the successor. But as search of illegal shortcuts to gain money increased, it replaced the innocuous Benami transactions with harmful ones.
This activity marked the inception of sham sales, where the property owner while transferring the property to a Benami, never had the intention to sell it, nor business purposes or economic benefits, but just for deception and to escaping from the tax liabilities. The nominee is just a mere figure here and the property will be controlled by the real owner itself.
The flourish of the latter made the authorities to think and in 1988, Parliament banned Benami transactions altogether and made that properties involved in such transactions will confiscated. However, the authority failed to enact method for an adjudication and appellate machinery for further procedures. After 27 years long wait, we are expecting to finally remove all the deadlocks of Benami transactions when this monsoon session ends.