The PBPT Act or the Prohibition of Benami Property Transactions Act is really going to make things tough for people involved in real estate trading with unaccounted cash investment. Such people have to disclose their amount or have to quit such investment plans.
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Penalties and imprisonment:
According to the act, a “benami” property is the one that is authorized by one, and invested by someone else. The act turns such properties to be confiscated by the government. Moreover, people held with such properties might have to suffer sever years prison, in addition with a considerable amount of fine(about 25% of the property’s present value).
Anyone, if deliberately gives wrong information about the “benami” properties will also have to suffer from imprisonment of about five years. Additionally, these people will have to pay a significant amount of fine. In general, about 10% of the property’s market value is charged as fine. If you are investing n such benami properties, despite knowing that it’s a “benami” property, then also you have to suffer a seven years imprisonment sentence.
People, who are already informed about the “benami” status of a property, still encourage others to invest or motivate customers to buy, will also be imprisoned for five years. The same groups of people will also have to deposit 10% of the property’s present value as penalty.
The “benami” transaction modes:
The power of attorney or the person in whose name the property is bought will also have to reveal about their source of income. Failing to give satisfactory answermay cost penalties or imprisonment, accord to the new laws.In general, the benami property owners have the original documents and enjoy authorization, which they can sell as they find an appropriate price. Agricultural properties or the properties of no authorizations are generally sold this way through benami owners. Needless is to say that such transactions are made through cash only. However, PBPT act and the recent demonetization have certainly affected such transactions in Indian markets. In other words, usage of black money in real estate sectors is no more an easy way available.
Be aware brokers!
PBPT act has also managed to put a break in to fraud real estate property broking agencies. It’s a fact that everyone knows is that most of the Benami trading are done through fraud broking agencies. These broking agencies hold no leg authorization. As a result, it becomes easier for them to cheat people or to avoid legal actions. Such organizations in general vanish after investment. In most cases, the transactions are done in cash. However, recent PBPT acts and demonetization later by the government of India has made things really tough for such brokers or the benami property owners.
The above brokers are not just active for the commercial lands or properties; they are equally active for agricultural trading as well. Moreover, the owners of such benami “agricultural” properties also don’t disclose about the agricultural productions from these lands. Indeed, things are going to be really tough for such property owners to operate the illegal business.