A month after the attempt to rope in unaccounted cash, it is time to swoop down on Benami property. The move could cause a slump in the already shaky high end property market, but now that the Benami act has come in effect this November 2016, all property must be assigned to real people and not fictitious entities. One month after PM Modi’s bold attempt to cleanse India’s cash economy of ill gotten wealth, he needs to put in place a corrective system on the Benami property purchase by black money accumulators. This needs to be done for all property bought in the last decade especially from 2007 onwards, ever since the property prices and cost of living spiraled across India.
“The PBPT Act 2016 defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine,” the official notification of the newly amended act that CBDT has notified w.e.f. from Novemeber 1 states. “The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner. Properties held benami are liable for confiscation by the Government without payment of compensation.” The act is a much needed amendment to the old 1988 act which recognized the benami property but did not make it illegal. Benami (incognito ) property buying is considered to be responsible for the sky high property prices across the nation.
Property prices in India moved to an all time high during the UPA 2 rule 2008-2013 when corruption and black money reportedly peaked in India. The NHB Residex ( 2007-100) of global property prices ( see graph ) show the doubling of property prices during the five year period and a marginal decline after the new Government came to power in 2014. The unsold inventory of high end properties in the top 3 cities ( Delhi NCR, Mumbai and Bengaluru) rose by 4% to nearly 5 lakh homes in 2015. Still prices have not declined because the builders are holding on to unsold assets with the hope that the unspent black money that is still rampant in the ecosystem will mop up the exorbitantly high properties once the dust and din about income declaration settles down.
The Governments demonetization move has already created panic amongst the hoarders of black money who are trying out ingenious methods to enter the banking system through Benami ( incognito ) accounts. Some are trying piggybacking on the Jan Dhan account holders, through traditional moneylenders and goons, that was opened for the rural and urban poor while yet others are trying to push in wads of currency through petrol pumps, hospitals and medicine chain outlets that were given exemption and permission to collect old currency notes till the 15th of December.
However creating panic is not enough. Since the process has begun the Government must go whole hog and keep up the pressure up. The Benami property act is now in place and it would be only right to start an identification process of what property is Benami and what is legitimate in right earnest. So all property bought in the last decade needs to be connected to Aadhaar Nos / PAN Nos including those owned by corporates, trusts and NGO’s. Those not assigned a PAN number should be declared Benami after a three month notification period ending 31 st March 2017. Also it is better to concentrate and move quickly on identifying high end property that has been bought in the last decade, than gold that could be ancestral and has a sentimental value, especially during the wedding season.
DISCLAIMER : Views expressed above are the author's own.
