Lok Sabha passes Benami Transactions (Prohibition) Amendment Bill 2015
The amendments will strengthen the Bill in terms of legal and administrative procedures, and to effectively prohibit benami transactions and circumvention of law through unfair practicesbusiness Updated: Jul 27, 2016 21:58 IST
Adding teeth to the government’s crackdown on black money, Lok Sabha on Wednesday passed the Benami Transactions Amendment Bill. Among the key changes incorporated in the new Bill include a case for exemption for “genuine religious trusts” outside the purview of the legislation.
Moving the Benami Transactions (Prohibition) Amendment Bill 2015, finance minister Arun Jaitley said: “This is predominantly an anti-black money measure. A lot of people who have unaccounted money buy immovable property in the name of a fictitious person or a “benami” person. These transactions have to be discouraged.”
The bill marks a continuation of the government’s efforts to curb black money and provides for confiscation of assets held in the name of another person or under a fictitious name to avoid taxation and to conceal illegally obtained wealth.
The bill provides for a fine of up to 25% of the fair value of the asset and imprisonment of up to seven years, unlike an earlier lapsed version of the bill, which stipulated either a fine or imprisonment.
Under the bill, the term “property” will cover movable, immovable, tangible and intangible properties. In case of joint ownership of property, the tax payer will have to show financing sources.
Accommodating the concerns raised by certain members about religious properties or those owned by deities or religious institutions, Jaitley said the government under this Bill will exempt such bona fide entities.
“There is Section 58 under the law which clearly states that charitable or religious organisation properties, the government has power to exempt those,” Jaitley said responding to concerns of some members about the applicability of the amended law on properties in the name of holy books and deities.
“If there is a genuine property which belongs to a church or a mosque or a gurudwara or a temple, section 58 says that the government has the power to exempt it,” he said.
The minister warned that exemption to such entities, cannot be a pretext for tax evasion, adding “if you make any illegal business out of it... if you create a fake religious sect and start keeping benami property, then government won’t exempt it, so please don’t do that”.
The amendments aim to strengthen the Bill in terms of legal and administrative procedure so as to overcome the practical difficulties which may arise in the implementation of its provisions when it becomes an Act.
The legislation is also intended to effectively prohibit benami transactions and consequently prevent circumvention of law through unfair practices.
Responding to suggestions of members on why the government has not come out with a new law in place of the 1988 Act, the Minister said such a move would have given “immunity to persons who acquired benami properties during the period from 1988 to 2016”.
On the passage of the Bill, experts said that it will strengthen the banks to enhance their recovery procedures in future.
“With the approval of the new Benami Transaction (Prohibition) Bill, the government has taken a strong and sure step towards curbing money laundering concerns at a local level. This would act as an impetus specifically in tracing benami assets in case of corporate borrowers siphoning off funds and defrauding the banking system. Banks would also be able to take advantage of the bill as an aid to enhance recovery procedures, once it is established that bank funds have been used to create benami assets. Money trail investigations and asset tracing exercises are tools which can be used by banks,” said Vikram Babbar, executive director, fraud investigation and dispute services at EY.