Tightening the noose! next Is Benami property

Relevance and use of the article in UPSC prelims and mains examination:

Dear aspirants this article is about benami property and transaction. It is quite informative as well in many heads helps you to analyse many things about this issue. As we know Taking Rs 500 and Rs 1,000 notes out of currency is, of course,not enough to fight black money. In the days to come, the government will have to take a series of moves to make this step effective. PM has himself promised that his government will now get touch on benami property – which like gold and dollars is one of those avenues where unaccounted cash is parked. There is indeed a law under which the government can confiscate benami properties, but it has not been effectively implemented. Please read it carefully.

Information about Benami property:

What is Benami?

Benami essentially means property without a name. In this kind of transaction the person who pays for the property does not buys it under his/her own name. The person on whose name the property has been purchased is called the benamdar and the property so purchased is called the benami property. The person who finances the deal is the real owner.

The property is held for the benefit - direct or indirect - of the person paying the amount.

What constitutes Benami property?

Property that does not stick to the following criteria:

Property held in the name of spouse or child for which the amount is paid out of known sources of income

A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income

Property held by someone in a fiduciary capacity

This means, by law, if you buy a property in name of your parents, too, can be declared as benami.

In August, Parliament had passed the Benami Transactions (Prohibition) Act, with the assurance from Finance Minister Arun Jaitley that genuine religious trusts would be kept out of the purview of this new legislation.
The new legislation will make a provision of seven year imprisonment and fine, replacing the three-year jail term, or fine, or both.

What is Benami Act?

First, a benami transaction is one where a property is held by one person and the amount for it is paid by another person. Therefore, in a benami transaction, the name of the person who paid the money is not mentioned. Directly or indirectly, the benami transaction is done to benefit the one who pays.

What isn’t a benami transaction?

Property held under the name of spouse or child, for which the amount is being paid through a known source of income.

A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income.

Property held by someone in a fiduciary capacity; that is, transaction involving a trustee and a beneficiary.

What falls under benami transaction?

Assets of any kind — movable, immovable, tangible, intangible, any right or interest, or legal documents. As such, even gold or financial securities could qualify to be benami.

How it affects the people?

It is being done to curb on black money. People with unaccounted income will sure have a tough time ahead. As for the general public, it won’t be much of an issue if their transactions are legal.

Who are the authorities in charge and what are their roles?

According to the government release, there are four authorities who will conduct inquiries or investigations i) Initiating Officer, (ii) Approving Authority, (iii) Administrator, and (iv) Adjudicating Authority.

Why is an Appellate Tribunal formed?

An Appellate Tribunal will hear appeals against any orders passed by the Adjudicating Authority while appeals against orders of the Appellate Tribunal will go to the high court. The Tribunal, has a maximum time period of one year, from the last day of the month in which the appeal is filed, to hear and finally decide the appeal . The Appellate Tribunal will consist of a Chairperson and at least two other Members of which one shall be a Judicial Member and other shall be an Administrative Member, stated the report.

Analysis:

Fighting corruption, on paper Shocking but true: A law to curb benami deals has been in existence for 23 years now but it remains to be implemented Benami transactions contributing to the making of a parallel black-money economy trace a long history in India.
Moving ahead to further check its growth, parliament totally prohibited benami transactions, making it an offence and prohibiting all suits and claims actions based on benami transactions. But as the abuse and fraud around the benami transactions continued unabated, parliament was pushed to repeal section 82 of Indian Trusts Act and Section 281A of the Income Tax Act along with other consequential repeal.

A need of proper mechanism:

Not that there is no awareness or no mechanism to effectively deal and curb these benami transactions. Ever since 1988 there has existed the Benami Transactions (Prohibition) Act, but has still not been implemented, thereby failing to impact benami transactions.
If even after 23 years of its enactment the rules for carrying out the purposes of this Act have still not been framed, there is no clarity on the issues like recovery procedure, punishments incurred, and competent authority in-charge, then who is to be blamed for this entire situation?

conclusion:

After a long period of stagnancy, the above development finally shows some ray of hope. But this action needs to be followed up at an urgent pace to help it reach some effective conclusion. Exigency of efficacious action is prompted not only in order to safeguard the credibility of democracy; but also in order to curb the growth of a parallel economy in India which, according to a World Bank study called ‘Shadow Economies All over the World’, has swelled to around Rs 15 lakh crore.

Question:

What is benami property? How come that after banning high denominations by government the checking into the benami transactions help to boost the economy and certainly become a ray of hope for providing social justice. Discuss in brief.