Law to deal with benami properties introduced in Lok Sabha

NEW DELHI: The government on Wednesday introduced in the Lok Sabha a stringent law to deal with benami properties, proposing legislation that provides for confiscation of property and up to seven years of imprisonment to curb the menace of black money in the country.

The bill proposes that property acquired in the name of any person other than the wife and children will be treated as benami and attract the stringent provisions of the law. Property in the name of a sibling would be permitted only if it is in joint ownership and purchased through known sources of income. The bill, which is part of the Narendra Modi government’s big crackdown on black money, was approved by the Union Cabinet earlier on Wednesday.

In keeping with the government’s promise to prevent stashing of black money in overseas bank accounts, Parliament on Wednesday passed the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Bill, 2015, which is aimed at unearthing such funds parked in foreign countries.

The Benami Transactions (Prohibition) (Amendment) Bill, 2015, provides for attachment and confiscation of benami properties and also fine with imprisonment. This is one more initiative to fight the menace of black money inside the country, according to an official statement issued after the Cabinet meeting.

The bill will go to the standing committee on finance and is likely to be taken up in the monsoon session of parliament. Apart from confiscation of property, a fine of 25% of the fair market value of the property will be imposed.

The definition of property has been expanded to include more assets. Benami transactions are the most common method used to hide and generate black money.

As a sequel to the announcement in the budget, the Union Cabinet chaired by Prime Minister Modi has given its approval to amend the Benami Transactions (Prohibition) Act, 1988, the statement said.

“As regards curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current session of the Parliament,” finance minister Arun Jaitley had said in his budget speech in February.

“This law will enable confiscation of benami property and provide for prosecution, thus blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate,” he had said.

The original Benami Act was enacted in 1988, but the rules were not notified. The previous UPA government had introduced the Benami Transactions (Prohibition) Bill to replace the 1988 Act, but it lapsed with the dissolution of the 15th Lok Sabha.