NRI Corner: Steer Clear Of Benami Transactions
While Real Estate Regulatory Act (RERA) is perhaps the biggest reform in the real estate market in India, there is another one which is not much talked about but is applicable on all the property transactions in India and everyone has to take cognizance of that whether an Indian resident or a non-resident Indian (NRI). Wondering what are we talking about?
Well, it is the Benami Transactions (Prohibition) Amendment Act, 2016. This Act came into effect from November 2016. As the term suggests, it prohibits benami transactions in the property market.
Considering the capital-intensive nature of property transactions, it is believed that a large number of transactions are undertaken without revealing ownership. Usually, people who do not declare their full income on government records, go for such property transactions as it helps them hide the source of income.
The Benami Transactions (Prohibition) Act, 1988 has been on the statute book for more than 28 years but it could not be implemented due to certain anomalies. However, this Act is now fully enacted.
The law has empowered the authorities to attach properties for which the ownership is unknown. Such benami properties can also be confiscated eventually.
There are strict penal provisions in case anyone is found involved in benami property transactions in India. Once proved, an offender can be held for rigorous imprisonment of up to seven years. The minimum period of imprisonment has been ascertained at one year.
In addition, the guilty shall also be liable to pay a heavy penalty which may extend up to 25 percent of the total fair market value of the benami property in question.
As per a press release issued by the Ministry of Finance, property worth more than Rs 200 crore has come under the scanner of the Act, from November 2016 to March 2017. Over 140 cases have come into light and properties for 124 cases have already been attached. Even the bank accounts that were used in benami transactions have been attached by the government.
With such reformatory framework enforced in the country, the Indian property market is on a fast-track to becoming an organised market.
NRI property buyers can expect clean deals in such an organized market and steer clear of any fishy transactions that may lead to regretful situations at a later stage.