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A new law to prohibit illegal benami transactions, under which up to seven years’ imprisonment and penalty for those indulging in such activities can be handed out, will come into effect from November 1, the finance ministry said on Friday.
With a view to curbing the menace of black money, Parliament had in August passed the Benami Transactions (Prohibition) Act, after assurance from Finance Minister Arun Jaitley that genuine religious trusts would be kept out of the purview of the legislation.
“The rules and all the provisions of the Benami Transactions (Prohibition) Act shall come into force on November 1, 2016. After coming into effect, the existing Benami Transactions (Prohibition) Act, 1988, shall be renamed as the Prohibition of Benami Property Transactions Act, 1988,” the Central Board of Direct Taxes (CBDT) said in a release.
While the existing law provides for up to three years of imprisonment, fine, or both, for carrying out benami transactions, the amended legislation would provide for seven years’ imprisonment and fine.
The Act defines benami transactions, prohibits them, and further provides that any violation is punishable with imprisonment and fine.
“The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner. Properties held benami are liable for confiscation by the government without payment of compensation,” CBDT said.
