Lok Sabha clears bill to crack down on Benami deals

Mail Today Bureau   New Delhi     Last Updated: July 28, 2016  | 09:27 IST
Lok Sabha clears bill to crack down on Benami deals
Finance Minister Arun Jaitley

The Lok Sabha on Tuesday passed a comprehensive Benami Transactions Amendment Bill which aims to shut avenues for the creation and parking of black money in benami properties.

Moving the Benami Transactions (Prohibition) Amendment Bill 2015 for the consideration and passage, the Minister said the legislation was predominately an anti-black money measure and its purpose was to seize benami property and prosecute those indulging in such activities.

A lot of people who have unaccounted money buy benami property in the name of fictitious persons ... these transactions have to be discouraged, he said.

While the existing law, which has not really been put into operation, provides for up to three years of imprisonment or fine or both for carrying out benami transactions, the amended legislation would provide for seven years imprisonment and fine.

However, the Finance Minister assured the Lok Sabha that genuine religious trusts will be kept out of the purview of the legislation.

On concerns expressed by certain members about religious properties or those owned by deities or religious institutions, Jaitley said the government under this Bill will exempt such bona fide entities.

There is Section 58 under the law which clearly states that charitable or religious organisation properties, the government has power to exempt those, Jaitley said responding to concerns of some members about the applicability of the amended law on properties in the name of holy books and deities.

If there is a genuine property which belongs to a church or a mosque or a gurdwara or a temple, Section 58 says that the government has the power to exempt it, the minister explained.

At the same time Minister made it clear that such entities, "cannot be used as a pretext for tax evasion, adding if you make any illegal business out of it... if you create a fake religious sect and start keeping benami property, then government won't exempt it, so please don't do that.''

Responding to suggestions of members on why the government has not come out with a new law in place of the 1988 Act, the Minister said such a move would have given immunity to persons who acquired benami properties during the period from 1988 to 2016.

While the 1988 Act has nine sections, the amended law would have 71 sections, the Minister said, adding that under Article 20 of the Constitution, penal provisions cannot be applied retrospectively

The 1988 Act, which also has provisions for prosecution, has not been operationalised as the rules in this regard have not been framed, he said.

Jaitley said that offences under the amended law would be noncognisable as the government does not want multiple agencies to get involved and harass people.

Besides bona fide religious trusts, he said there are few exceptions relating to Hindu Undivided Family and trusts owning properties.

Explaining the rationale behind having four stages with regard to deciding matters under this law, the Minister said such a system would ensure that there is no misuse of power by anyone and the possibility of error is reduced.

Under the new legislation, there is provision for filing an appeal against an order within 45 days, which would also be an inbuilt limitation.

Asserting that the amended law would not be in conflict with the Income Tax Act, Jaitley said the two would be supplementary to each other.

Responding to demand by some members that benami properties should be vested with state governments, Jaitley said it was a central law and hence the power is with the central government. He, further said states have power to acquire properties under state legislations.

In association with Mail Today Bureau

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