New Delhi: People keeping 'benami' properties to evade taxes will get up to seven years rigorous imprisonment and fine, as per a new law aimed at checking black money in real estate sector.
President Pranab Mukherjee has recently given assent to the Benami Transactions (Prohibition) Amendment Act, 2016 and it has been notified by the government, officials said on Tuesday.
The law has strict provisions to confiscate benami properties and stiff penalty for entering into such transactions, they said.
A transaction is considered as benami (meaning nameless) where a property is transferred to or is held by a person and the consideration for such property has been provided or paid by another person.
In these cases, the property is held for the immediate or future benefit, direct or indirect, of the person who has provided its payment.
The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, last year by Finance Minister Arun Jaitley. It was then referred to the Standing Committee on Finance which gave its report on 28 April.
Lok Sabha passed the bill on 27 July and Rajya Sabha gave its nod on 2 August.
As per the new law which has amended Benami Transactions Act of 1988, whoever is found guilty of the offence of benami transaction shall be punishable with rigorous imprisonment for a term which shall not be less than one year, but which may extend to seven years and shall also be liable to fine which may extend to 25 percent of the fair market value of the property.
Under the old law, the penalty for entering into benami transactions is imprisonment up to three years, or a fine, or both.
The Act also has a provision of penalty for providing false information.
Any person, required to furnish information under this Act, knowingly gives false information to any authority or furnishes any false document shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to five years and shall also be liable to fine which may extend to 10 percent of the fair market value of the property, the law said.
However, no prosecution shall be instituted against any person under this law without the previous sanction of Central Board of Direct Taxes.
The new law will check domestic black money especially in real estate sector, officials said.
The legislation has provision for setting up of an authority as "Administrator" which shall have the power to receive and manage the benami property confiscated under the Act.
The new Act mandates central government to designate one or more courts of Session as Special Court for trial of the offence punishable under it.