Benami Properties to be Rough After Demonetization Drive (Download PDF)

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After recent demonetization of 500 and 1000 currency notes to check black money, the Government has expressed clear intent to bring all ‘Benami’ properties under scanner ensuring strict punishments for those caught under the Prohibition of Benami Property Transactions Act (PBPT Act) soon.

The fight against black money is already well underway. It is clearly understood that property and gold are the next two big important avenues to park black money. This move will ensure transparency in the real estate market boosting buyer՚s confidence during property transactions.

A similar move on Gold is expected from the Government, checking Black money in stricter ways.

Benami Properties to be under Scanner

Tax Evasion

People with undeclared income who have made purchases of property will come under the Benami property act.

About Benami Property

  • The properties without names, that is a person who buys a property does not buy it under his/her name, most of the time to evade taxes.
  • There are instances where owners have bought property in the name of their employees like drivers and peons.
  • The person in whose name the property is purchased known as the Benamdar, the employee (like driver) in our example.
  • The financier gains directly from such a transaction, as tax department does not flag off this purchase, as it is hardly detectable.

Definition of Benami Property

  • Any asset-movable, immovable, tangible, intangible, any legal document, rights or interest can be Benami if it is owned by one person but paid for another, from an unknown source of income.

Prohibition of Benami Property Transactions Act (PBPT Act 2016)

  • Violation of the Act is an offence and is punishable with imprisonment for up to 7 years and fine, along with confiscation of the Benami property by the Government without compensation.
  • As per the act, a property is Benami if it is owned and paid for by different entities.
  • The Act also prohibits recovery of the Benami property by the real owner from the Benamidar.

- Published/Last Modified on: November 14, 2016


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