Everything You Need To Know About The Benami Law & Why You Shouldn’t Take It Lightly

Benami Law
Source: gulfnews.com

The current government is trying to counter tax evasion by encouraging people to declare their Benami (undeclared) assets under the Benami Transactions (Prohibition) Act 2017 or else face severe consequences.

Prime Minister Imran Khan stated on television that it was because of tax evaders and rampant corruption that the economic conditions in Pakistan were at an all-time low.

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The FBR (Federal Board of Revenue) has set up a structure for the implementation of the Benami Law, which will begin taking effect on 1st July 2019.

Government Concessions and Incentives

A person can benefit from the Assets Declaration Ordinance 2019 until 30th June 2019 if he/ she has undeclared or Benami properties.

By declaring the properties, for e.g. houses, plazas and housing schemes, one will not serve any time in jail and dodge the confiscation of his/ her assets.

“This scheme is a golden opportunity for you to declare money you’ve kept at home, dollars, jewelry, benami accounts and foreign assets that you possess,” Imran Khan stated in a televised address.

Furthermore, there is an authentic cash reward for people (i.e. whistle-blowers) who provide credible information leading to the discovery of a benami transaction and/or proper property ownership. For example, with the discovery of an asset worth Rs. 2,000,000 or less, 5 per cent of the price of the property will be given to the informer.

Consequences for ‘Benamidars’ After the 30th June Deadline

Benamidars who refuse to claim and/or declare their properties even after the concessions from the government should be prepared to deal with the penalties as the FBR has made clear just how weighty the situation is.

  • One year of jail time will have to be served at the very least but up till seven years can be given.
  • Additionally, the assets for e.g. land holdings of the benamidar may be confiscated by the government.
  • A fine of 25 per cent of the fair market value of the property will need to be paid.
  • Furnishing false information under the benami law to the authorities is also punishable by at least 6 months of imprisonment – however, this can be extended to 5 years.

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On the other hand, being an amnesty scheme (one in which the government grants a pardon to a certain group of people for e.g. money launderers for a specific reason), the benami law has stirred up its share of controversy.

Opponents of the law claim the ordinance to be a ‘financial NRO.’

The NRO, which was issued by Pervez Musharraf in 2007, granted amnesty to politicians, bureaucrats, etc. who were accused of crimes such as embezzlement and money laundering. This was deemed unconstitutional and therefore, the FBR was quick to reply and denied the link between the ordinance and the NRO. The FBR further stated that initiatives such as the asset declaration scheme are legal under the Constitution of Pakistan under compelling circumstances.