Benami exemption list likely to be pruned

NEW DELHI: The government is likely to curtail the list of entities exempted from the proposed Benami Transactions (Prohibition) Act to give more teeth to the new legislation.

The move comes at a time when the government is under intense pressure to trace black, or untaxed, money of which benami deals are considered to be one of the main sources.

The finance ministry has accepted suggestions made in this regard by the parliamentary standing committee on finance, headed by senior Bharatiya Janata Party leader Yashwant Sinha, a finance ministry official told ET.

"The standing committee's report has been accepted and amendments will be taken to the cabinet soon," the official said.

The panel had asked the government to tighten the law and only exempt property deals in the name of wife or unmarried daughter. It had recommended that a person standing in a fiduciary capacity for the benefit of another person including a trustee should not be exempted from the law to give it make it more effective.

The law proposes to exempt a person standing in a fiduciary capacity for the benefit of another person and includes a trustee, executor, partner, agent, director of a company or legal adviser, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any other person as may be notified by Centre for this purpose.

The panel had also asked the government to create an in-built mechanism within the ambit of the law to look at suspicious transactions and incorporate proper definitions in the law to remove any scope for ambiguity and interpretation. The committee also wanted the government to have a provision for an appellate body for expeditious disposal of cases registered under the law.

The new bill, introduced by Finance Minister Pranab Mukherjee in August 2011, seeks to replace the existing Benami Transactions (Prohibition) Act, 1988 and prohibit holding property in benami, besides providing a mechanism and procedure for confiscation of property held in benami without any compensation. Mukherjee, who is now the UPA's candidate for presidential election, is keen on pushing some of the key legislations that he had piloted.