In his final radio address of 2016, Prime Minister Narendra Modi reiterated his determination to act against those who park illegal wealth in property with no clear titles and no authentic name of a clear buyer attached to it.
This is the PM’s avowed implementation of the Benami Transactions (Prohibition) Amendment Act, 2016, modified in August this year that came into effect from November 1. “This is major step to eradicate corruption and black money... We are going to take action against the properties which are purchased in the name of others. That is the property of the country. My government feels that it is our responsibility to help the poor and I will do it,” Modi had promised in November.
The Act punishes illegal transactions with up to seven years of imprisonment and penalties.
The Act, and the promised action are being hailed as long overdue. There is some hesitation over what constitutes benami property. It literally means property without a name. The person who pays for the property does not buy it under his/her own name. The person on whose name the property has been purchased is called the ‘benamdar’ and the property so purchased is the ‘benami property’. The person who finances the deal is the real owner and often has several fronts for the purchase to go through to his monetary benefit.
Property held in the name of spouse or child, joint property with a sibling, or relatives for which the amount is paid out of known sources of income is not considered benami. Nor is property held as trustee.
However, a traditional lack of clarity in purchase processes has meant that by law, if you buy a property in the name of parents, it can be declared as benami.
Since such property may be confiscated by an Initiating Officer, there is some fear that provisions like these may be misused by vested interests. Finance Minister Arun Jaitley has assured religious groups that genuine religious trusts would be kept out of its purview.
It’s a beautiful piece of legislation that goes after criminalisation within an unregulated sector, propped up by political vested interests and the builder mafia. In a rare move, the Bill also punishes false information.
Insiders point out that benami properties rise typically when there is a rise in scams, such as with the Lalu Prasad Yadav-Sukhram telecom scam, and the mushrooming of Tier II & III towns. Along with the Real Estate (Regulation and Development) Act, the Land Acquisition Rehabilitation and Resettlement (Amendment) Bill 2015, the benami clean up is a big hurrah in favour of the honest landowner.
