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.
Effect on economy:
- Loss of revenue
- Generation of black money
- Moral hazard for honest tax payers
- Artificial inflationary tendencies
- Increase in the prices especially of real estate
Provisions of Benami amendment act:
- Establishment of adjudicating authority
- Case has to be decided in a year’s time
- Adjudicating authority shall have one chairperson and at least two other members.
- Benami property can 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 upto 25% of the fair market value of such Benami property.