In tandem with its efforts to bring back black money stashed abroad, the finance ministry is planning to introduce a new and comprehensive Benami Transactions (Prohibition) Bill during the ongoing Budget session of Parliament.
“The Benami Law will be a new bill and stricter... if you are able to establish ‘benami’ you will be able to confiscate property. We are going to tighten how to do an effective confiscation,” Central Board of Direct Taxes (CBDT) chairperson Anita Kapur said.
This move, along with the roll-out of the Goods and Services Tax (GST) would help curb creation of black money, she told reporters in New Delhi on Tuesday.
“We hope that with GST being rolled out, this incentive to not to declare transaction to some extent gets minimised, that we are able to address the generation of black money to some extent,” Kapur said.
The Benami Transactions (Prohibition) Bill, which found mention in Budget 2015-16, has been introduced in Parliament before, and lapsed in the 15th Lok Sabha.
Apart from confiscation, it would also provide for prosecution and act as a major avenue for blocking generation and holding of black money in the form of benami property, especially in real estate.
Benami refers to the practise of transferring an asset — usually real estate — without transferring the title deed, and with payment made in cash.
Kapur also said soon the concept of minimum alternative tax (MAT) will become “irrelevant” as all tax exemptions given to corporates are proposed to be phased out over four years.
“If all exemptions go, MAT itself will become irrelevant. There will be no difference between book profit and profit you offer for taxation purposes,” she added.
About the Benami bill, Kapur said: “With some environment cleaning, if the tax rates come down, the incentive to secret income will also come down.”
“We will address the generation, clean up the system, we will become tough on tax evaders and hope generation of black money gets settled. Earlier we did not want to take extreme measures of prosecution. Now we are telling everybody that if you have evaded tax, please be ready to face prosecution.”
Kapur further said the new comprehensive law on blackmoney holders in foreign nations will also have a “rebuttable presumption”, which will give the income tax department powers to prosecute overseas holders not making proper disclosures in India.
A rebuttable presumption is a conclusion to a fact in presence of certain evidences and can be overturned only if evidence on the contrary is provided.