Benami Transactions (Prohibition) Amendment Act is an important topic for the UPSC civil services exam. It is covered under the polity section of the IAS exam.
Benami transactions refer to those transactions in which the real beneficiary of the transaction and the person in whose name the transaction is made are different, specifically transactions relating to properties. The property is held by one person while the payment for purchasing the property is made by another. (The person on whose name the transaction is made is called Benamdar while the property involved in such a transaction is called Benami property). By doing so, public revenue is defrauded and the real owner is hidden. Benami property could include assets of any kind including legal documents, rights, assets, intangible assets, tangible assets, movable property or immovable property. It also includes financial securities and precious metals like Gold. However, a property held in the name of the spouse or children for which the amount is paid out of known sources of income is not Benami. Similarly, joint property of siblings or other relatives for which amount is paid out of known resources of income is again not considered Benami property.
The Benami Transactions (Prohibition) Amendment Act, 2016 designed to curb black money was passed by parliament in August 2016, came into effect in November 2016. The new law amended the Benami Transactions Act, 1988 and renamed the same as Prohibition of Benami Property Transactions (PBPT) Act, 1988. The amendment act strengthens the parent Act in terms of legal and administrative procedure. The aim of the act is to redirect the unaccounted money into the financial system.
- The act provides for establishment of an Adjudicating Authority by the Central Government. It shall be consisting of a Chairperson and at least two other members. A person who has been member of Revenue Service or Income Tax only can become chairperson or member of adjudicating authority. The case shall be decided in a year’s time, once it is referred by the initiator to the adjudicating authority
- Appeals against the adjudicating authority’s decision can be taken to the Appellate Tribunal at New Delhi.
- Once an order is finalized, the Benami properties will be confiscated. The designated officers appointed from among the income-tax officers will manage and disposed-off these properties.
- Benamidar or any person who abets other person to enter into such transactions will face rigorous imprisonment ranging from one to seven years in jail. The person may also be liable to pay a fine of up to 25% of the fair market value of such Benami property.
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