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Benaami property: Next step in fight against black money

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Soumitra
Proud Indian Nationalist
 

On Nov 8, 2016, Prime Minister Narendra Modi addressed the nation and launched one of the biggest steps in the war against Black Money. The Demonetization of Rs. 500 and Rs. 1000 notes was a firm step to tackle the black money held in form of cash. Many people who had unaccounted cash were forced to destroy the same or put it in the banking system thus making it part of the formal economy. After the Demonetization some 18 Lakh people who had deposited 4.2 Lakh Crore Rupees were sent notice by the IT department asking for explanation for the source of funds.

Demonetization no doubt had caused short term inconvenience to people but they understood the govt’s intention. The opposition and the “liberal” economists went to town shouting that demonetization was anti people but the people responded well to the move and in election after election- Panchayat, Local Body, By Elections- people voted in favour of the BJP culminating in massive landslide victory or 324/403 seats for BJP and allies in the UP-assembly elections. The UP-Assembly elections were said to be a referendum on demonetization and the people gave their thumbs up for the move.

The fight against black money has not ended with Demonetization. As had been pointed out by many that cash is just one of the ways to hoard black money. The other being Benaami Property and Gold. Benaami Property is a property owned by a person but shown in other person’s or a shell companies name. Most of this property is bought in cash and there is very little record of the same.

The Modi govt has proved that it can take seemingly unpopular but bold decisions in its fight against black money. A similar bold decision is needed for bringing out black money in form of Benaami Property. There are a few bold ways in which this information can be brought out

 (1) Ban on Cash Transactions: In the budget the govt has already proposed the ban on cash transactions above Rs. 3 Lakh. This will have a significant impact on the new purchases of Benaami property in cash.

(2) Data Mining: The demonetization move has brought a large amount of data to the govt. It can do data analysis on the transactions from 8th Nov to 30th Dec to find out people who have cash in hand disproportionate to their income. Many of these people holding black money in cash may also have Benaami property. The govt must carefully scrutinize all property transactions in the period 8th Nov to 30th Dec to find out buyers with dubious credentials.

 

Apart from this the govt should also look at relatives and close associates of the people suspected to have black money in cash. It is possible that they have property in the name of their spouses, children, parents, associates etc. If it is found that the relatives and associates of people suspected to have black money are owners of properties then a thorough investigation must be done to determine the true ownership of the said properties

(3) Re-registration of properties: The third and final step that I am proposing is the boldest step. It may be as bold as the step of demonetization of 86% of the cash.

The govt should announce that the registration of all properties with value above a threshold limit (say 20 Lakhs) has been cancelled and they must be re-registered with the authorities. There will be no charges for this re-registration. However, this re registration will be closely monitored and all properties will be linked to Aadhar Cards and Pan Cards of the owner.

 

If it is found that a person has properties disproportionate to his known source of income, then he/she will have to give the explanation or will have to pay appropriate fine. There can be an extended window of 3 months to re-register your property. In these 3 months property transactions, will only be allowed on properties which have done the re registration.

If any properties are not re-registered in the given time frame, then they will be deemed to be owner less and should be auctioned off and the revenue credited to the govt accounts.

This step will bring to fore the correct ownership structure of the properties in question and unearth huge amount of black money hidden in form of property. Like with cash deposit there can be a voluntary disclosure of the property ownership so that people are given a chance to come clean

I sincerely believe that such steps will be a big blow to black money and will be supported by the public at large. Such bold steps are required for a clean corruption free India

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Soumitra
Proud Indian Nationalist

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