The real estate business revolves around the concept of production, selling, and buying of land. As Louis Glickman, a philanthropist and New York-based real estate investor, says, “The best investment on Earth is Earth.” This is a universal principle that is abided by real-estate sellers as well as buyers.
Talking about ‘Benami property’ in the real-estate business context, we observe that it is a term that is extensively used every now and then. Have you thought about what it could possibly mean? And what impact does it make on real estate? This article attempts to find an answer to both questions.
The term ‘Benami’ conveys the meaning of purchase of land by veiling the identity of the buyer of the property. The real owner purchases it in the name of a benamdar. A Benami transaction is a system by which a property is held by a person for which the payment is made, or consideration is provided by another person. So, what all comes under Benami properties to give it this meaning? Come, let us explore!
Property bought by you for any of your family members for which the amount is paid with a traceable, known source of income can come under Benami properties.
A property bought in fiduciary capacity between a trustee and a beneficiary can also come under this.
Not just individual properties, properties that are jointly bought can also fit into this category. The condition is that the amount for that land purchase should be paid with a known source of income.
There are certain pointers to which attention has to be given before tagging a property as a Benami property. Some of these include:
The evaluation of the motive behind the purchase
The money source for the property purchase
The conduct of both the buyer and seller during and after the transaction
The relationship between the benamdar and owner
The nature of the use of the property after the purchase
However, there are certain exemptions to these conditions as listed with reference to the Benami Transactions (Prohibition) Act. This particular came into effect in the year 1988. It was later amended in the year 2016. The immunity is achieved by certain property buyers when the land purchase is made in the name of certain specific relatives of the family under specific conditions. Mostly these kinds of transactions and activities are done to save their assets from the taxation dept.
For instance, the property can be held in the name of a son without attracting the provisions of ‘prohibition of benami property transaction act of 1988’. This can be done the consideration is made out of a known source of that particular individual. But the same cannot be done in the name of a brother’s son. This will attract Benami Act. The act was still found to have certain deficiencies. In order to address the same, the Benami Transactions (Prohibition) Bill of 2011 was formulated.
Over the years, amendments were made to the act, and there have been many noted changes. The amended Benami act accounts for certain conditions like – holding the property in the name of a parent, which is funded by the child, can attract the Benami law now. From the 1988 Benami act to the 2016 amendment made on it, many vital modifications have been observed.
This is thought to cast an impact on both old and new property buyers. The amendment has made stricter provisions like – those found guilty of the offense committed under the Benami act will be imprisoned for seven years and will be charged with a fine of about 25 percent of the property’s market value. They can also lose the property.
But these amendments and changes made to the act also come up with certain limitations.
Say, for example – Consider a scenario of you buying a property from your friend. If this friend was a benamdar of another person who has initially paid for the property, and even if you have no clue regarding the purchase of the land, you could fall into trouble. The government can attach the property you bought even if you have paid the consideration out of known sources.
Now that we have gone through the Benami Act meaning and the essence of Benami transactions, let us get into the crux of the impact of impacts on real estate.
The property ownership will be transparent under the Benami act. This can reduce the confidence of investors.
The prohibition of the Benami property transaction act has an impact on land transactions and affects the volume of such real-estate transactions.
Benami issue is considered an important issue because of the possibility of conversion of black money into white. It implies the idea of restriction of unaccounted cash flow into the economy.
The industry of real estate is the main area of investing this unaccounted money. With the intervention of the Benami act in the field of real estate, the property price will be affected adversely.
If found that the property purchase attracts the Benami act, there will be a proper penalty as instructed by responsible authority and law.
The Benami act will help unveil the identity of the owner. This can put the investors in a dilemma since the actual owner will come into the picture. This will also tend to limit the participation of financial institutions.
Your mind voice must have asked you by now –
What if the Benami property is located outside your country?
For sure, the confiscation of such property will be quite a hassle, and the procedure will have certain complications. But the definition of a Benami property under the act is extensive and can account for the transaction, even in this scenario. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015 can be applied in this case by the authorities to account for assets that are undisclosed and out of India.
So that was about “What is Benami Property and its Impact on Real Estate?”. We hope you find the article interesting!
You might be interested to read our other similar Blogs.
Get the Latest News and Updates Of Indian Real Estate
Read more stories
Well, we are aware that real estate has never exactly been one of those binge-worthy blog categories. It has neither been the kind of topic you could not get enough of, nor is it half as juicy as celebrity gossip.
However, in India, real estate blogs are starting to get clicks and likes, and it has become one of the trending topics. People worldwide are beginning to realize how real estate as an industry affects the economy and how important it is to understand housing trends to enhance their lifestyle.!
The relevance of informative Indian blogs on real estate and finance are at an all-time high now. The youngsters are bidding big on investment options, and brackets such as realty have proved to be highly dependable compared to others.
The Millennials are flooding in to invest in apartments, plots, and villas, and the earliest members of the Gen-Zs' entering the workforce and looking forward to having their own homes. This has only fuelled the growth of digital real estate blogs to keep up with the tech-savvy generations.
Also, the real estate sector has been proving time and again, how reliable an investment choice it is. So, learning about the sector is the smart way to climb up the ranks, and where else can you learn so much except from real estate Blogs! Real estate is the second-largest contributor to the country's GDP; hence there is no doubt that it affects every one of us, whether we see a future in the Real Estate Industry or not. After all, we all live in our homes, and housing is a significant part of the industry.
We know exactly what you need to know and what you like. We know you want to feel engaged and entertained, and at the same time, hot housing news should be fed to you! We have turned the tables, grab a spoon, and start digging!
And Voilà! We present to you the most Interesting and Informative blogs!
As our name implies, we are not limited to realty alone, granted we do Specialize in it. We are all about Homes, and we are in love with Tech and Innovation! Naturally, our blogs cover a myriad of topics related to real estate and housing from Luxury, Lifestyle, Home Decor, Vastu, Real Estate News, Reviews, Tech & much more!
We make every one of our real estate blogs as interesting as it can get and attach with absolutely unique and accurate images, to provide you a better understanding. Not only do we cover a wide range of topics, but we also cover them at the right time. We update you on our socials such as Facebook, Instagram, Linkedin, Pinterest, and Twitter on every trending topic, so you are never miss anything and worry about being left behind!
However, we never go out of hand with our Indian real estate blogs that our beloved Readers have come to love over the years.
Everything in India is a state of constant flux; maybe that's why we Indians became one of the most adaptable and cosmopolitan people in the world!
If the nation's elements are shifting its focus, how can real estate be any different? Indian Real Estate Sector is perhaps one of the most dynamic ones in the entire world. Since the Real Estate in India is yet to be organized entirely, the variations in one segment affect another in ways difficult to comprehend.
The complexity and nuances can be understood only by reading about what is going on in the sector. Like we mentioned above, it affects every one of us. Hence it is essential to keep up to date.
With its ever-changing shifts and tides, it's virtually impossible to keep track of the sector's latest trends and sink our anchor deep. That's where we come in! We are just one google search away!
We also try to solve every home-related query through our Indian real estate blogs. And that's not all. We provide you insights on technologies that make the modern taste and rate of development possible, detailed analysis on real estate projects, insights on loans and taxes, advice on the home buying process, and articles on health and fitness. We provide you information about the trending topics in the Indian real estate industry.
We also host video podcasts named Expert's Voices, where we discuss with the leading players in the industry about market scenarios, offers, anything and everything related to real estate.
In addition, we host Real Estate News so you can stay updated on the sporadic events that happen around the country concerning Indian Real Estate. We also make short and easy to understand real estate video blogs.
We have got so many topics to read about that even if you have years of experience or are just curious and googling to get some ideas about Indian real estate blogs, you will find the best ones here.
At Homes247.in, we strive to provide you only the best real estate blogs. Our blogs are always entertaining; even the dullest subject we touch upon, we try to make it engaging. We make sure the best of the best is are the only standard we keep ourselves at when it comes to our service or our Indian real estate blogs.
Our team is made of a dynamic group of keen hands-on expert researchers who work tirelessly along with passionate and knowledgeable content writers to bring to your fingertips the world of real estate.
On every one of our real estate blogs, we research vigorously, write creatively, carefully compile, and thoughtfully curate the best real estate blogs, especially for you, from India's best content writers and contributors.