Among many hindrances to parking your real estate investment in Pakistan, one is to be wary about benami properties. The government of Pakistan has recently applied quite a few restrictions and legal penalties on “benamidar” – a person who possesses a benami property.
But what the fuss around such property types is all about? Let’s understand the anatomy of benami properties and the things associated with them. So, let’s dive right in.
How Can One Define Benami Properties?
The National Assembly law simply dictates that:
“A benami property is that real estate which is the subject matter to benami transaction and also includes proceeds from such property.”
Simply put, the benami property is nothing but real estate that is bought through a benami transaction. Basically, the government wants to shut down the influx of benami transactions that, for years, provided a safe heaven for money launderers.
The NA law Part 8 (A) further elaborates that:
“…where a property is transferred to or is held by, a [fictitious] person, and the consideration for such property has been provided, or paid by, another person;…”
The law explains benami transaction as the property type that, on paper, belongs to an unknown or a fictitious person’s name – that doesn’t exist in reality. So, when law agencies or government organizations try to locate the transaction history for various purposes, including property taxes, illegal occupation, etc., they would find a standalone structure built on a whole bunch of lies.
So to curtail such a thing from happening, the FBR, along with other public and private firms, devised such a law and imposed it with ‘immediate effect,’ showing the severity of the condition.
Benami Properties: What FBR Says About Them?
FBR, on 18th March 2019, released a press release named “IMPLEMENTATION OF BENAMI TRANSACTIONS (PROHIBITION) RULES, 2019”, summarising the details of the National Assembly law for the countrymen. However, we suggest you read the press release here to get an overall understanding of the subject matter.
The above document comprises points deduced from the official law, and FBR shortens them in a way understandable by the layman. FBR discussed the ownership of the asset, transaction agreement, potential types of benami properties, legal punishments, timeframe, false information, whistleblower rewards, and more.
Note: The press release document is available in both languages – English and Urdu.
What if You Have a Benami Property?
Now, the law is strict in such a case. There can be two possibilities. The first one can be for the person whose name was falsely assigned to the real estate. The second possibility can be when the authorities track the person who made the fraudulent transaction under someone else’s name.
Now, if you’re that unfortunate peep or “benamidar” who somehow got into this tiresome situation, there’s a way out, and people call a legal way. When authorities and agencies inspect the account, check your records, acquire the benami property, and clear your name from their list, only then can you have a breadth of peace of tranquility.
Because in recent times – 2019 and 2020, cases such as money laundering, corruption, and taking bribes n all come under more strict laws and are then subjected to severe punishment. Furthermore, creating or sponsoring benami properties is not only applicable to legal repercussions, and the accused also have to pay a possible capital penalty.
Legal Penalties on Benamidar
Going back to the National Assembly law of Benami properties, it’s explicitly mentioned in Chapter VIII – Offences and Prosecution in parts 51, 52, and 53 about the penalty for benami transactions, the penalty for false information, and previous sanctions, respectively. The law further added that:
- 51 – II – Penalty for Benamidar: Anyone [he or she] who is found guilty under the benami property act is subjected to a rigorous imprisonment of at least one – which may extend to seven years. Furthermore, the convicted one has to pay a fine of almost 25% of the property’s fair market value.
- 51 – Penalty for False Information: Anyone who issued false information or any lead to the relevant authority, and if found guilty, [he or she] shall be punishable for at least six months – which may be extended to five years. Moreover, the accused will also have to pay a fine of a maximum of 10% of the property’s fair market value.
In addition, the aforementioned amendments are rolled out and applied with immediate effect. The government, agencies, and federal lawmakers are pretty serious about the benami properties issue; part of the reason may be because of the fact the same law our neighboring nation – India – implemented on their land in 1988 when we were busy training Mujahideens.
Rewards For Anonymous Whistleblowers
FBR, in their press release, clearly stated the terms on which whistleblowers will get treated. When the person reports FBR about the benami transaction or about the benami property, he or she will get five, four, and three percent if the property’s worth 20,00,000 Rs., >20,00,000 Rs. ≤50,00,000 Rs., and >50,00,000 Rs., respectively.
The press release further elaborated that the monetary benefit will not be applicable to the informer in the following cases:
- The reward shall only be given when FBR confiscates the property and sells it to the independent investor.
- FBR already had the information about the informed property.
- Information, the person, provided to FBR was false.
- Information wasn’t available on public records.
So, before filing for the benami property, make sure you have read the rules properly and avoid going only for the benefits, as your provided data may fall under false information.
If you’re plunging into real estate investment in Pakistan, along with hoards of different stepping stones, you need to be conscious of the case of the benami properties. This is because agencies and lawmakers are quite active when it comes to anything related to money laundering. So be safe and make an informed decision.
Or you can also ask a professional real estate agency for your help in finding a reliable property to live in with your loved ones.