ISLAMABAD - The Federal Board of Revenue (FBR) on Wednesday said that Benami Transactions Prohibition Act 2017 would be applicable from February 2017 when the government had passed it.

The federal government on Monday notified the Benami Transactions Prohibition Rules that would empower the FBR to confiscate assets held in other than owners’ names. The term ‘Benami’ refers to the practice of holding property/assets in the name of one person for the benefit of another. However, benami is often aimed at concealing ownership of assets acquired through illegal means, defrauding creditors, and/or evading payments of government fees, charges or taxes.

Duration of punishment will be from 1 to 7 years under the act

The Act would be applicable when it was signed by President, February 2017, said Dr Hamid Ateeq Sarwar Member (Inland Revenue – Policy) while addressing a press conference along with Muhammad Javed Ghani Member (Customs-Policy) and other senior officials. He further said that federal government would confiscate whole properties, expensive vehicles and bank accounts registered with fictitious individuals. Sarwar said that FBR would act as prosecuting agency, which would make cases regarding Benami transactions.  Giving the details, he said that commissioner of income tax will exercise the powers and perform the function of authority. Initially, the officers designated will investigate the available data to identify benami assets. The FBR’s officer will issue a notice for attachment of the benami assets for a period of 90 days. During this period, the tax officer will investigate the case to make an FIR following identification of benami property or bank accounts etc. The FIR will then be referred to the adjudicating authority.

The adjudicating authority would make the decision whether to confiscate the assets or not. Furthermore, the applicant or federal government could approach the federal tribunal for challenging the decision of adjudicating authority, he added. Sarwar said that in the Board in count of FBR has given approval for establishing three approving authority in three cities (Islamabad, Lahore and Karachi) with clear jurisdiction. The jurisdiction of Lahore Commissioners would be from Bahawalpur to Lahore, jurisdiction of Islamabad Commissioner from Gujranwala to Peshawar and jurisdiction of Karachi Commissioner would be Sindh and Balochistan provinces.

He said that law is meant for creating deterrence, not to generate revenue. He said that under the rules, the government has also announced hefty cash rewards for the whistle-blowers of the benami movable and immovable assets. The government has also announced cash awards for whistleblowers in detection of benami property. Three slabs of cash award have been notified. However, the amount of rewards will be sanctioned after confiscation of the benami property.

Under the Benami act, the duration of punishment would be from one to seven years.

It is worth mentioning here that the last PML-N government had approved the Benami act in January 2017 and it took two years to make it operational. This is a major step to plug loopholes to avoid payment of taxes in Pakistan. The enforcement of Benami Act will enable to the government to confiscate all assets and bank accounts kept on name of others in a bid to evade taxes.