Mumbai: Prime Minister Narendra Modi’s vow to take on benami, or nameless properties, can bring greater transparency to a notoriously opaque sector and help check prices if a new law is implemented properly, experts said on Monday.
The practice of buying a property in the name of someone other than the buyer has been widely misused to buy real estate with undeclared income and with fake names and identities to avoid paying tax.
It is estimated benami properties worth billions of dollars are held under fictitious names across India, bypassing laws to check ownership and depriving states of valuable revenue that could be spent on development and welfare schemes.
A 1988 law on such properties was amended this year to ban illegal benami transactions with stricter punishments including imprisonment and a fine of up to a fourth of the property’s fair market value. These properties can also be confiscated.
“We are going to take action against the properties which are purchased in the name of others. It is the property of the country,” Mr Modi said in his monthly radio address on Sunday.
Property as defined under the 1988 law incl-udes not only land and homes, but also assets such as gold, stocks and bank deposits. “If the new law is implemented properly, there will be greater transparency in the real estate sector, there will be less corruption, and we may see a correction in prices,” said Vinod Sampat, a property lawyer. “But these transactions are hard to track.”
