The amendments of Benami Transactions (Prohibition) Act should further enhance India’s attractiveness as an investment destination by encouraging greater transparency in ownership of property. Along with other regulatory changes such as implementation of Goods and Services Act (GST), Real Estate (Regulation & Development) Act (RERA) and Land Digitization, this amendment is a step in the right direction. In the short term, it will lead to a reduction in transaction volumes. However, in the long term, it will help aligning transactions with ethical standards and will increase international institutional investors and financial insitutions participation in this sector.
› Any property transaction, where the property is held by a person but the consideration for the same has been provided by another person; and the property is held for the future benefit of the person paid the consideration.
› A property transaction carried out in a fictitious name
› A transaction where owner of the property is not aware of or denies ownership
› A transaction where the person providing the consideration is not traceable or
However, as per the regulation the following transactions are excluded from the definition of Benami transactions
› A property acquired out of known sources of income of the Hindu Undivided Family (HUF) and held by the HUF
› Properties held by a person in fiduciary capacity (where a fiduciary is responsible for managing the assets of another person, or a group of people)
› Properties acquired from known sources in the name of spouse and child
› Properties acquired from known sources jointly with brother and sister or any lineal ascendant or descendant
The amendment to the Benami Transaction (Prohibition) Amendment Act is aimed at restricting generation and use of unaccounted money. Real estate is considered as one of the main avenues for investment of unaccounted money in India.
The recent amendment to the Benami Transaction Act 1988 has put in stringent mechanisms to track down such properties, confiscate such properties, besides putting the deviant in jail for up to seven years. A fine of up to 25% of the market value of the confiscated property, can also be imposed on “benamidars”.
In this way we can say that along with other regulatory changes such as implementation of GST, Real Estate RERA and Land Digitization, this amendment is a step in the right direction in improving transparency in real estate transactions. In the short term it will lead to a reduction in transaction volumes. However, in the long term it will make India a more attractive investment destination, aligning transactions with ethical standards and will increase international institutional investors and financial insitutions participation in this sector.