Benami Transactions Amendment bill, 2016

Benami Transactions (Prohibition) Amendment Act, 2016 is an act that is meant to prevent any defrauds to the public revenue and it came into effect on November 1st, 2016. ‘Benami’ is derived from the combination of two Hindi words ‘Bina – naam’ which literary mean ‘without name’, so Benami transaction refer to transactions that are done on the name of a person who is not the real benefactor. This essential means that the property is held by one person while the amount for the property is paid by other, this is done to hide the identity of the real owner thereby protecting him/her from tax etc. The current act is an alteration of the older 1988 Benami Transactions (Prohibition) Act and it was first introduced last year in the Lok Sabha.

Definition of the Act in the report

In August the government released a report in the Gazette of India, which extensively explains the Benami Transactions (Prohibition) Amendment Act, 2016. Benami transactions are defines in this report as transactions where a property is transpired to or is held by a person but the amount for the property is paid or provided by other person. In this report property transaction is also defined as where

  • Owner refuses any knowledge of the ownership of the property or is not aware about the property
  • Person providing the property is untraceable
  • Fictitious or fake names are used to make the transactions

Charges under this Act

Before any violation of the act lead to imprisonment for 3 years or fine or both but now under the amended Act any violator of the act will be punished with 7 year imprisonment and will also be charged with a fine that may extended about 25 % of the benami property’s fair market value. It is also stated in the report that any false information provided during the transaction will lead to imprisonment of about 6 months to 3 years and also will be charged with 10 % of the benami property’s fair market value.

Authorities in charge

Investigation or enquires will be conducted by four authorities and those are Initiating Officer, Approving Authority, Administrator and Adjudicating Authority. A notice is issued to a suspicious party by the initiating officer and the officer can also hold the property for 90 days from the notice’s issue with the permission from the Approving Authority. The initiating officer can continue to hold the property after the period of 90 days and then refer the case to the Adjudicating Authority.

All the documents and evidence regarding the property is thoroughly examined by the Adjudicating Authority and then order if the property is a benami property. The resulting order is received by the Administer who will handle the property subject to conditions as set. Additional/ Joint Commissioner of Income-tax, Tax Recovery Officer and an Assistant / Deputy Commissioner of Income-tax will be informed and then they will perform their respective functions to punish the violator.

In case of grievances

If any one feels that the above officers have not done them justice then they can go to the Appellate Tribunal with their case and appeal against the order of the above officers. This tribunal will consist of a Chairperson, a Judicial Member and an Administrative Member.

If this act is applied and followed correctly then it will help immensely in our country’s economic development as it will increase tax collection by reducing fraud.

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