Impact Of Benami Law On Old And New Property Buyers In Mysore
What Is Benami Property?
A benami property is an anonymous property – that is, the owner of the property is not known or is under the name of a fictitious person or a person other than the actual person owning the property.
Property buyers in Mysore must know that a benami transaction is the transaction of a benami property. Benami properties include both tangible and intangible, movable or immovable, tangible or intangible, assets such as flats, houses, land, etc. and also any right or interest in such property.
Benami Transactions Act
Originally, the Benami Transactions (Prohibition) Act was enforced in 1988 to curb benami transactions and emphasise on the true beneficiary of a benami property and avoid corruption in the form of tax evasion, money laundering (illegal conversion of black money into white money), etc. In fact, the term ‘benami’ literally translates to ‘without name’ or roughly as ‘anonymous’ in Hindi language.
On November 1, 2016, Benami Transactions (Prohibition) Amendment Act was passed to include stricter rules for the existing act of 1988. This was done just a few days before the Government of India announced the demonetisation of banknotes of INR 500 and INR 1,000 which was done to bring into light black money hoarders in the country.
How Does The New Benami Law Affect Both Old And New Property Buyers In Mysore?
- Property buyers in Mysore have to purchase properties in their own name and not conceal their identity by buying it in the name of another person, even a close family member. Before Benami Act, there were many instances where properties were bought by one family member under the legal name of another
- A property is considered Benami if its purchase has not been recorded in the accounts of Benamidar. In case it is recorded, then explanation can be given to reduce the fine or avoid imprisonment altogether.
- Old property buyers in Mysore who have bought a benami property with or without knowledge and the seller (Benamidar) of the property are liable for fine (upto 25% of the market value of the property), imprisonment (upto 5 years) or both. The property will also have to be given up to the government and no compensation will be provided by any means.
- The rules remain the same for NRIs who purchased benami properties under their relatives’ name or those who are planning to purchase property in Mysore under someone else’s identity. Other than NRIs, the Benami law will also affect foreign investors in the same way.
- Just as in the case of RERA, benami law protects new property buyers in Mysore from fraudulent and fake sellers. While RERA mandates transparency in financial transactions from the builders and only approves the transactions of RERA-registered properties, Benami law halts benami property transactions altogether.
- Whether the benami property is generating income or not, income tax is still valid and must be paid by the Benamidar. Penalty will be imposed on the legal owner of the Benami property if any concealment of facts is found.
On a brighter side, going for RERA-approved properties with a clear owner will keep property buyers in Mysore out of any legal consequences. While the Benami property law mainly targets intentional fraudsters, it may sadly affect unsuspecting Benami property owners who would have purchased a Benami property without knowing that it was one. A real estate consultant can be more than helpful in making you understand the law better and know your rights that can protect your actions.
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