The government plans to enact the Benami Transactions (Prohibition) Bill, 2011, to replace the existing Benami Transactions (Prohibition) Act, 1988. The bill will be tabled in the monsoon session of Parliament.
According to Ashutosh Limaye, head, real estate intelligence service, Jones Lang LaSalle India, the new bill has many advantages for law enforcers. “Because of its more detailed provisions, it offers a wider legal net within which such properties can be defined,” Limaye said.
“This means a lot more cases of benami properties, which would previously have been dismissed because the laws were vague, can now be proved in court. This bill will result in more such properties being confiscated.”
Industry experts say the real-estate markets in Delhi, Mumbai and Ahmedabad see the most benami deals. Typically, in land, about 50% deals are benami, while in constructed premises, 20% are benami.
Others are not so confident about the new bill. “I do not expect much change,” said one developer who did not want to be named. “This could be just an attempt to save face in the wake of the recent scams.”
An industry analyst said requesting anonymity, “Benami transactions are typically a source of funding for the small players. The money comes in while purchasing a land parcel and at the early stages of construction. Typically, an investor provides this initial funding and the builder blocks a couple of flats against this investment.
“Later, when end-users come in and there isn’t much inventory left as these flats are sold. They are typically held in no particular name, he said.”
However, properties acquired by an individual in the name of the spouse, brother, sister or any lineal ascendant or descendant are benami transactions that are not prohibited.
The bill will confer the powers of a civil court on authorities implementing its provisions. Confiscated property may be vested in the Central Government.
Anyone who induces another to enter into a benami transaction could face imprisonment for not less than six months and up to two years and also a fine.
