Benami Property Bill | Owners of Benami Properties May Lose Their Properties

Benami Property Bill | Owners of Benami Properties May Lose Their Properties

What is Benami Property | Benami Property Bill | Owners of Benami Properties May Lose Their Properties | What Action will PM Modi Make on Benami Property

The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, 2015. ... The Act defines a benami transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person.

In the noble fight to erase corruption from its roots, the central govt. under the leadership of Hon’ble Prime Minister, Shri Narendra Modi has started a new project to erase corruption from the real estate and property sector. This new project is named as Benami Property Bill. Under this propaganda, it is illegal to buy property in the names of others, who might be relatives too. Benami is a Hindi word which means a object which belongs to no one. But the term Benami property is little different from the usual concept. Under the new laws, all those properties which are not in the name of yours will be Benami and hence will be illegal. There are several properties all across the nation which are Benami and are brought with black money. So Modi has started a new bill which will erase this menace from its roots.

What actually is Benami Property?

Suppose a person wants to buy a property, which might be a plot of land or an apartment, a bungalow or a commercial space. Then that person who pays the price of the property should ideally become the owner of the property. But in many cases, the story is little twisted. For a property, how big or how small, should be registered in the name of the buyer. In many cases, people pay the price of the property but choose to register the property in the name of a third person. This means the property is in the name of someone and some other person is paying the price for it. That kind of property which is brought under the name of third person is termed as benami property. In most of the cases, the benami properties are brought in the name of closed relatives like brother, sister, uncle, etc. So under the new bill, this practice will come to a halt and only property can be brought in self’s name.

Benami Transactions (Prohibition) Act of 1988 and the Benami Property Bill of 2015

In India, the fight against the illegal or benami properties started back in the year 1988. In that year, an act named BTA was passed to make the transaction of properties and register them to other’s name. This step was taken to fight against the menace of black money which has crippled the Indian economy for years and is a major blot in the country’s future. Now after Modi came to power in the year 2014, one of his major tasks was to solve the problem of black money and throw corruption out of this country, from its roots. So in 2015, the Benami property bill was amended. Under this bill, those properties which are benami will be ceased by the govt.

Criteria for a property to be deemed as benami

As per the Benami property bill of 2015, there are several criteria out of which if one is satisfied, that property will be considered as benami and stringent action will be taken as per sections of law. The criteria for a property o become benami are as follows:

• The purchased property has been registered under the name of a fictitious person who does not exist at all, i.e. the property is brought in a false name. For example, Mr. X is the buyer of an apartment and pays full price of the property. But the ownership recorded and registered with the govt. is under the name of Mr. Y. And the matter of fact is Mr. Y does not exist at all and is a false name. Then that property will be considered as a benami property.
• The property belongs to a person and is under his/her possession, but the actual price of the property is being paid by another person. Let’s take a simple example. Mr. X has brought a piece of land. Mr. X has paid the price of that land as well as all other costs of registering the land. But while registration, the ownership of the property has been given to Mr. Y. The owner i.e. Mr. Y may be a friend or relative to Mr. X and knows the whole scenario. Then also the piece of land will be deemed as benami property and Mr. Y will be a benamidar which means owner of a benami property.
• The owner of the property is unaware of the fact that the property belongs to him/her. That means a property is brought under a person’s name without his/her consent. Suppose a person buys a bungalow in the name of his/her uncle. But his uncle is unaware of the fact that the bungalow is registered under his name. This means the entire transaction of property has been done without the consent of the owner. Then, that bungalow will be marked as a benami property.
• The buyer of the property who made the payment is fictitious or is untraceable but the property is registered in someone’s name. This is another instance where suppose a property is registered under your name but the person who has made the property transaction is fictitious or is untraceable. Then you are just a benamidar and is in possession of a benami property.

Exclusions where the property will be not considered benami under the Benami Property Bill, 2015

The Govt. of India has set some guidelines under which a property will be termed as benami. But there are also certain exceptions and exclusion scenarios when the property will not become benami and will be perfectly legal to posses. Below are some conditions which will not make a property benami and will be accepted under law:

• A property which is brought under the name of a person’s wife or husband will not be a benami property. This means suppose a person pays for the property but is making his wife, the registered owner of the property. Then the property will be absolutely legal. Same is the case for women buying properties in name of their husbands.
• A property brought under the ownership of daughter who is not married. Before marriage of your daughter, you can buy a property in her name. Buy after marriage, it will be against the Benami property bill and will be termed as benami property.
• A transferred property with partly transfer procedure will be excluded from being considered as benami property. Suppose you own a property and is willing to change its ownership. You have initiated the necessary property transfer formalities legally, under the Property Transfer Act of 1882. Then your property will be legal and will not be benami.
• GPA properties will be exempted from making benami property. GPA property means that property which has been given from one person to another under the rule of power of attorney. If there is a legit paper work of the power of attorney procedure against a property, then it will be excluded from being considered as benami property.
• Those properties which have joint ownership with valid documentation are also not benami. Properties can be jointly purchased and registered in multiple names. So the joint properties with proper payment and documentation will not become benami. You can own joint property with your son, wife, sibling, business partner, etc.
• There are special provisions for the HUF families living in India regarding the benami property. A property buyer who belongs to a HUF and is the karta or the leader of the family can buy the property in the names of the family members. But there must be full documentation and the funds used to buy the property should be accounted at any point of time. Another important condition for the HUFs is that the karta must have the fiduciary capacity i.e. the power to handle the money matters of the HUF family.
• In case a property has been already declared under IDS, 2016, the property will not be booked as a benami property. The central govt. issued a circular for declaring such properties and money which were not declared earlier. The govt. pressed some penalty on those black money and benami properties, imposed tax on it and made it legal. So properties which are already declared under the IDS will be exempted from being ceased by the govt.

Beneficiary is not the owner

For better understanding of benami properties and its logic, the example of beneficiary and owner is described here. You are paying the price of a property and is making your sister the registered owner. But your sister is not using the property or not getting any benefits from it. But, by taking this step, you are drawing benefits like saving on loan interest rates, saving taxes, getting rebate on stamp duty and registration charges of property, etc. Then you are the beneficiary of the property. So your sister will be a benamidar and your property will be deemed benami and is subjected to be ceased by the govt. in accordance to law.

How will the govt. authorities examine whether the property is benami or not?

The govt. authorities will scrutinize each and every property carefully to check the ownership details and the source of funds used to buy those properties in order to finish corruption from its roots. At first, the authorities will examine the source of funds used to buy the property. Then it will check whether there is valid and justified intent behind buying the property in the name of the registered owner. After that, the document verification will be done. This will also include the history of taxes paid to the govt. against the property. The tax evaders will be punished under proper sections of law. The entire investigation will make things crystal clear about the fact, who is the real owner of the property and who is getting benefits out of it. There are several cased of benami properties which is under scrutiny where the value of property is less than Rs. 10 lakhs but there is a PAN registered with it. Generally, PAN is required only when the price of property is more than Rs. 10 lakhs. Those properties which have undeclared taxes and TDS not deducted will be easily marked by the authorities and will be ceased.

Team of authorities responsible for examining the property ownership

Internal reports suggests that the govt. will form teams of authorities which will conduct the property investigations and raids and mark the benami properties. These teams will consist four govt. authorities each. The teams will have members like initiating officer, approving authority, adjudicating authority and administrator. The entire investigation of the benami properties will be done step by step from one authority to another.

Legal actions to be taken against the benami property holders

The govt. has also set some guidelines regarding the legal actions which will be taken against all those benami property holders or better called benamidars. Once a property is marked benami by the investigating team of govt. authorities, it will be impounded by the central govt. The accused will face rigorous imprisonment that may be of 1 year to up to 7 years. In addition to this, penalty of 25 per cent of the property value in the current market will also be charged from the benamidar. Also there is a legal provision for those who will not co-operate with the govt. authorities and will give false information. They may face imprisonment from 6 months to 5 years and also might be charged with 10 per cent of the property value in the current property market. Special fast track courts will be organized to the trail of the benamidars.

Some important data of benami property holders

Sl. No	Attributes	Related data
1	Name of project	Benami Property Bill
2	Year of amendment	2015
3	Objective	Stop corruption and finish black money
4	Launched by	Shri Narendra Modi
5	Rule under which bill is passed	Benami Transactions (Prohibition) Act of 1988
6	Exceptions	Property in the name of wife/unmarried daughter, property of Hindu Undivided Families (HUFs)
7	Way to declare benami property in advance to avoid legal actions	Income Declaration Scheme (IDS)