Prohibition of Benami Transaction And Its Socio Economic Benefits
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Read Current Affairs Topic: Prohibition of Benami Transaction And Its Socio Economic Benefits
Benami’ is a Persian word meaning ‘without name’ or ‘no name’. According to the Benami Transactions (Prohibition) Act 1988, 'benami' transaction is any transaction in which property is transferred to one person for a consideration paid by another person. In other words, the real owner of the property is not the person under whose name transaction is made.
Specifically, following types of transactions qualify to be called as ‘benami’:
- A property transaction carried out under a fictitious name.
- A property transaction where owner of the property is unaware of or denies such ownership.
- A property transaction where the person providing the consideration is untraceable.
Over the years, Benami transactions have become one of the most notorious sources of circulation and investment of black money.
Benami Transaction (Prohibition) Amendment Act
Though the act for prohibition of Benami transactions was in vogue since 1988, but it had very limited success in curbing them. For that matter, government passed the Benami Transactions (Prohibition) Amendment Act, 2016, which gave the power to the government to confiscate the benami properties without paying any compensation. .
The amended act also made its violation punishable with imprisonment of up to seven years and fine of up to 25% of the property. The term property under the act covers movable, immovable, tangible and intangible properties; however, mostly it is related to the real estate sector.
The amended act also provided forInitiating Officer, Approving Authority, Administrator, and Adjudicating Authority to conduct inquiry into the benami transactions. The Initiating Officer will be responsible for digging out the benami properties from District Registrar and land record department.
Under the new law, an Appellate Tribunal will hear appeals against orders passed by the Adjudicating Authority. Appeals against orders of the Tribunal, in turn, will be heard by the High Court.
The Section 58 of the act states that in case of charitable or religious organisation properties, the government will have the power to grant exemption.
Due to the investment of black money in the real estate market, the price pf properties usually remain artificially high. The twin attack of demonetization and benami transactions prohibition on the black economy may slow down the growth of real estate sector but in the long run, it will bring transparency and professionalism in the sector.
The mellowing down of the real estate prices and confiscation of benami properties will help the government in its plans of affordable housing for poor.
When a property has multiple ownership or false ownership or unknown ownership, banks are also hesitant in providing loan against such property and conduct their own title search subtly. The benami prohibition will help boost the lenders confidence who are currently fighting the bad debt.
The Benami Transaction (Prohibition) Amendment Act, 1988, along with other reforms like land digitization, Real Estate Regulation Act (RERA), implementation of Goods and Service Tax (GST) is a welcome step in a right direction to boost the confidence of ultimate real buyer and will also help in bringing the foreign investment. However, the actual results will take some time to become visible and will depend on the actual implementation at the ground level.
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