Under growing attack over corruption and black money, the cabinet on Thursday gave its approval for a tighter control over benami transactions, including confiscation of such property.
The benami transactions (prohibition) bill 2011, replaces the 1988 law that was enacted by Parliament but never brought into force due to legal loopholes detected after its passage."The new bill contains elaborate provisions dealing with the definition of benami transaction and benami property, prohibited benami transactions, consequences of entering into a prohibited benami transaction and the procedure for implementing the benami law," said Ambika Soni, I&B minister.
The bill — to be introduced in the monsoon session — will make it easier for the confiscating authority to identify a benami transaction since the new definition will not apply to properties held by coparcener (joint inheritance) in a Hindu undivided family, property held by a person in fiduciary capacity or property acquired by an individual in the name of spouse, brother or sister or any other lineal ascendant or descendant.
Benami transactions are rampant in the real estate sector. Even in the 2G scam some companies that got telecom licences were found fronting for others.
A person entering into a benami transaction would be liable for a maximum jail term of two years and a fine. The benami property can also liable for confiscation by the adjudicating authority.
The 1988 Act had allowed deals in the name of wife or unmarried daughter. It had a longer term of imprisonment of up to three years or fine or both.
Besides civil society, the Central Vigilance Commission had also been lobbying for a law to confiscate benami assets for more than a decade. A draft anti-corruption strategy drawn up by the CVC had recommended dovetailing enforcement of this law to the unique identification project.
“Quoting the unique identity number…would ensure that property is not sold to non-existent persons or in fictitious names and would provide information about any expenditure disproportionate to known sources of income,” the draft strategy said.