After Demonetisation its tough time for the Benami Property Holders
Apr 12, 2017 Legal Guidance
Previously, the benamidars used to keep the original documents in person and execute a power of attorney that allowed them to sell whenever the price appreciated. Mostly, agriculture land and urban properties were bought in this way, that too under the name of shell companies. Cash was the dominant mode of transaction. And Rs 500 and Rs 1000 notes were the most commonly used denomination for investing in real estate.
But after demonetisation of Rs 500 and Rs 1000, many people have tried to invest their unaccounted wealth in real estate in the names of their drivers, maids or through shell companies. But this as well is brought under check by the Prime Minister Narendra Modi. He has vehemently warned that more anti- graft steps are on the anvil and after the stringent Prohibition of Benami Property Transactions Act (PBPT Act) came into effect from November1, 2016.
Under this Act, if the cproperty is held by one person, but has been provided or paid for by another person, it would be named ‘benami’.
And the following steps will be taken by the government against people holding benami property:
1)The property in the name of the benamdar cannot be recovered by the real owner.
2)Benami property holders could end up with up to seven years of rigorous imprisonment and pay a significant fine.
3) The properties will also be confiscated.
4)If a person is caught to give false information knowingly, he could face rigorous imprisonment for up to five years and will have to pay a fine of up to 10 percent of the market value of the property.
5)The person who has invested in a benami property will have to pay a penalty of 25 percent of the fair market value of the benami property. Therefore, it means that a property worth Rs 1crore will attract a penalty of Rs 25 lakh and seven years of imprisonment.
6) Those who have been caught to give wrong information are liable to pay 10 percent of the fair value of the property.
Thus, if a benami property holder is found, he would not only suffer from loss of property but also penalty and punishment. So, now there is no escape for the people who have bought property in the name of his peon, driver or anybody unrelated to him and invested in agriculture property in their name.
According to the real estate experts, this way the government must be trying to warn people that they should not use their black money in investing in properties that are not in their name. But the bad news for people who bought such properties is that, as the Income Disclosure Scheme has already ended on September 30 of this year, it may be difficult for them to escape without serious consequences.
This step will invariably bring transparency to the real estate market in India as the investors will henceforth use correct names during property transactions. This, in turn, will minimise the title risk and the buyer’s confidence during property transaction will be boosted. And eventually, a fresh breath of professionalism would prevail in the real estate market.
But after demonetisation of Rs 500 and Rs 1000, many people have tried to invest their unaccounted wealth in real estate in the names of their drivers, maids or through shell companies. But this as well is brought under check by the Prime Minister Narendra Modi. He has vehemently warned that more anti- graft steps are on the anvil and after the stringent Prohibition of Benami Property Transactions Act (PBPT Act) came into effect from November1, 2016.
Under this Act, if the cproperty is held by one person, but has been provided or paid for by another person, it would be named ‘benami’.
And the following steps will be taken by the government against people holding benami property:
1)The property in the name of the benamdar cannot be recovered by the real owner.
2)Benami property holders could end up with up to seven years of rigorous imprisonment and pay a significant fine.
3) The properties will also be confiscated.
4)If a person is caught to give false information knowingly, he could face rigorous imprisonment for up to five years and will have to pay a fine of up to 10 percent of the market value of the property.
5)The person who has invested in a benami property will have to pay a penalty of 25 percent of the fair market value of the benami property. Therefore, it means that a property worth Rs 1crore will attract a penalty of Rs 25 lakh and seven years of imprisonment.
6) Those who have been caught to give wrong information are liable to pay 10 percent of the fair value of the property.
Thus, if a benami property holder is found, he would not only suffer from loss of property but also penalty and punishment. So, now there is no escape for the people who have bought property in the name of his peon, driver or anybody unrelated to him and invested in agriculture property in their name.
According to the real estate experts, this way the government must be trying to warn people that they should not use their black money in investing in properties that are not in their name. But the bad news for people who bought such properties is that, as the Income Disclosure Scheme has already ended on September 30 of this year, it may be difficult for them to escape without serious consequences.
This step will invariably bring transparency to the real estate market in India as the investors will henceforth use correct names during property transactions. This, in turn, will minimise the title risk and the buyer’s confidence during property transaction will be boosted. And eventually, a fresh breath of professionalism would prevail in the real estate market.
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