The government has finally implemented the long-awaited Benami Act in a bid to document the economy.
It has given a go-ahead to the tax officials to seize properties, vehicles, and bank accounts registered with fictitious individuals. From now onwards, all moveable and immovable assets registered with fictional entities to avoid taxes will be confiscated.
The law will finally take effect today following a delay of more than two years. Notably, the term ‘Benami’ means holding assets or properties in the name of a person other than the benefiter of that account.
However, more often than not, the term ‘benami’ is associated with the practice of hiding the ownership of assets attained through illegal sources, dodging payment of government fee, taxes, and defrauding creditors.
In order to curtail this practice, the government has introduced a new policy. There are now hefty cash rewards for the whistleblowers on the benami assets, both moveable and immovable.
The legislation came into being through an act of Parliament in January 2017, Benami Transactions (Prohibition) Act, 2017. However, the legislation went backstage amid a delay in finalization of rules.
In a recent development, the Federal Board of Revenue (FBR) has issued a notification that details the rules of the Benami Act.
Under the Act, three approving authorities will be set up in three cities, i.e., Lahore, Karachi, and Islamabad in the first phase. The jurisdiction of these authorities will be announced in a few days.
Moreover, the commissioner of income tax will perform the authority’s function. The designated officers will examine the available data to point out benami assets. The offices will be provided with the data of property transactions and mapping of plazas in the first phase.
The tax officer will first issue a notice preventing the transfer, conversion, or disposition of the benami assets for a period of 90 days. In this period, the tax officer will vet the case and form a first investigation report (FIR), which will then be referred to the adjudicating authority.