In yet another step aimed at curbing black money in the economy, the Lok Sabha passed the Benami Transactions (Prohibition) Amendment Bill on Wednesday.
A benami property is one that has been purchased in a fictitious person's name. In India, many people who have unaccounted money on which they have not paid income tax, buy benami properties.
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This amendment bill empowers the government to seize benami properties. It provides added legal and administrative powers that will enable the government to overcome the practical difficulties that arise in the implementation of the Benami Act.
"Earlier, it was difficult for the government to confiscate benami properties due to the legal impediments that arose. This bill tries to remove those impediments," said Rakesh Nangia, managing partner, Nangia and Co. He added that only if the property is in the name of wife, children, and close family members will it not be treated as benami. On the other hand, if it has been kept in the name of a distant third party, it could be confiscated.
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The amendment bill also seeks to establish adjudicating authorities and an appellate tribunal. It also specifies the penalties for those found to have entered into benami transactions. The existing Act lacked the provisions for vesting the property with the central government.
Under the Income Disclosure Scheme, which is on currently, a person can declare a benami property, and get immunity from the provisions of the Benami Act. The person making the declaration will have to pay 45 per cent tax on it. He can then become the legal owner of the property after a year.
The government has clarified that under Section 58 of the law, properties belonging to charitable and religious organisations will be exempt from the purview of this law. However, the law will go after those creating fake religious sects to keep benami property.
