How do people use and enjoy their black money? They buy properties and live an expensive life, but they do not buy on their own name.
People who make black money, to hide their expenses incur these expenses on name of other people.
In simple terms prohibition of benami property transactions act is an attempt to catch people who buys property on others name and remain benficial owners.
A benami transaction is one where actual owner and beneficial owner are different.
For example, Mr. X purchased a property from money given by Mr. Y. In this case though X is actual owner of property but Mr. Y is the beneficial owner who enjoys benefits of this property.
Benami Property as per act means
(8) "benami property" means any property which is the subject matter of a benami transaction and also includes the proceeds from such property;
Definition of benami transaction is explained in section 2 of Prohibition of Benami Property Transaction Act.
(9 "benami transaction" means,—
(A)a transaction or an arrangement—
(a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration except when the property is held by
ii) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 22 of 1996) and any other person as may be notified by the Central Government for this purpose;
i) a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;
(iii) any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual;
(iv) any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendent and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or
(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or
(C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;
(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious
Explanation.—For the removal of doubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), if, under any law for the time being in force,—
(i) consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of such property;
- ii) stamp duty on such transaction or arrangement has been paid; and
(iii) the contract has been registered;
Further this section even define meaning of Property. Property means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property.
If you buy a property on name of your wife, does it amount to an offence?
We will read about it.
Section 3 of act, reads
(1) No person shall enter into any benami transaction. Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.
So, it says that no one should enter into benami transaction. Punishment includes imprisonment upto 3 years.
In above heading you can read definition of benami transaction and what amounts to a benami transaction.
In above definition of benami transaction, following transactions are considered to be punishable:
Following transaction does not fall within definition of Benami Transactions
If you are found guilty of entering into a Benami transaction, you will face following penalties:
Further properties which are held under Benami Transaction can be confiscated by government.
The current Modi government is very strict on black money and want to control all kind of practices that generates black money.
This act was amended right before demonetization was announced.
Benami transactions are really bad for economy and humanity. Today in India real estate prices are sky rocketing and a middle class person cannot even think of owning a house in cities.
Price of real estate and other commodities are increased with help of black money. We already know that 90% property deals in India are done through cash to avoid stamp duty and income taxes. But these cash transaction also help black money holders to enjoy their black money.
As a common citizen we can help country and ourself by not buying anything in cash.
People are earning in crores and declaring income in lakhs, they are the real beneficiery of our wrong doings.
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