Benami property: transparency in India home ownership

Ajay Jain, the executive director of investment banking and head of the real estate advisory arm of Centrum Capital in Mumbai, talks about benami property.

Could you explain the issue of benami property in Mumbai?

People with excessive unaccounted monies have invested in properties in fictitious or other people’s names, thus sidestepping being the owners on paper while enjoying all the benefits. Such benami property transactions saw a hike during infamous scams where large amounts of black money were quickly hidden in properties. Not paying income tax on income earned leads to generation of black money being parked in the purchase of benami properties. Similarly, money received as bribes by many are being used for purchase of such properties. This includes transactions such as land purchase, purchase of residential houses, commercial properties, hotel buying and selling.

How effective do you think the ben­ami property transactions act will be?

The practice of putting the correct name to the transacted property will be put into effect. The properties of the right owners, once identified, will be confiscated by the government and furthermore, they will be prosecuted and liable to face imprisonment or penalty as the case may be. A large number of benami dealings are associated with land transactions. Clear titles will help developers to execute joint venture transactions. A lot of land inventory may become available to the government after the benami investigations, which may be opened up to fast-track the implementation of the prime minister’s dream of housing for all by 2020. The success of the act lies in its speedy and stringent implementation.

Are efforts being stepped up to trace benami purchases abroad?

The undisclosed foreign income and assets bill with compulsory reporting of foreign assets and income for resident individuals and the benami act – both these anti-black money measures indicate that the government is very serious about bringing unaccounted money and income into the system. India is inking agreements with many countries, including the US and Switzerland, to add new provisions to share banking information.

Follow The National’s Business section on Twitter