One of the banes of the society in India is the Benami property. There are various benami transactions that occur in the country. For one to understand what benami property is, a little explanation is needed.
If a person is earning money, then the person has to pay tax on the amount that was earned, if the money is above a particular amount. There are many people who try to evade tax and then use the money that they have earned to be transacted in the name of other people.
When a person uses the money to be transferred in the other persons’ name and then finally through that person reuses the money, then the whole process is called as benami transaction. Similarly, any property that is bought by an individual in the name of other people, usually friends, kith and kin, then the property that is bought by evading the tax sources is called as benami property.
The individual who would like to evade tax cannot do so if the proper is in the same name of the person earning money, so that name is change to another person, but the property actually belongs to the person who earned the money and has evaded tax. This is the main reason for the property to be bought in a benami name.
An individual will not be able to amass wealth is a same name unless the person pays property and wealth tax. All these kinds of taxes that are earned by the individual will not be taxed if it is in another person’s name. This make these people to buy and amass wealth in the name of fictious people and also in the names of the people who do not earn any money. All this is done so that the person can amass wealth.
The amassing of wealth without the knowledge of the Government in criminally wrong. So, the benami transactions and properties are a hush hush matter. If the property comes to the notice of the economic offences wing or the enforcement directorate, then the whole wealth will be taken over by the Government. To make sure that this does not happen, the people who indulge in the this activities try to keep this as secretive as possible and do not disclose information regarding this.