For the real estate market in India, the Real Estate Regulatory Act (RERA) is definitely the biggest improvement. But there is one more and is appropriate on every property dealings in India. Whether a Non Resident Indian (NRI) or an India citizen, everyone has to take cognizance of that. You have any idea what are discussing about? Yes it’s about the crackdown on Benami properties in India.
The Benami Transactions Amendment Act, 2016, which came into effect from 1st November 2016, prohibits benami dealings in the property market in India. That means no one can invest in properties with non-existent names.
The move aims to prohibit the deployment of money earned from unknown sources into the real estate sector. With this the government has once again reinforced its action on the parallel, cash-based transactions in the economy.
This Act is now fully enacted which has been on the law book for over 28 years but it could not be implemented due to certain things.
Let’s discuss that what exactly it is?
Thinking about the property’s capital intensive nature, it is trusted that an extensive number of dealings are executed without uncovering ownership of the properties in question. Generally individuals who don’t pronounce their full incomes on their income tax reports with the government choose such methods as it help them to blanket their earnings.
This system has enabled the experts to connect with such properties with unclear proprietorship. These benami properties can likewise be reallocated in the end.
There are severe corrective arrangements in the event that anybody is discovered associated with benami property exchanges in India. If demonstrated, a guilty the party can be in custody with an imprisonment for up to 7 years.
Not only this, but they have to give a penalty which can be 25 percent of the whole value of that benami property.
As mentioned by Ministry of Finance in India, from November 2016 to March 2017, the benami properties of more than Rs 200 crore have been uncovered by the officials, and this is just the tip of the iceberg. More than 150 cases have come into the limelight in a very short of a few weeks of enacting the Act, followed by widespread drives by the special task forces.
The way the benami transactions are surfacing up, it shows serious loopholes in the government’s systems and processes as well. It is still beyond understanding how such a large number of people are able to execute huge transactions in benami names with so much of confidence.
We can see that, the real estate market in India is soon to become an organized market with RERA in place, however, it is going to be a long journey for sure.
Meanwhile, the level of commitment shown by the government towards ensuring transparency in the property dealings are a good sign for all the investors who look for clean deals. NRIs, of course, form a major chunk of these investor groups.