Benami Transactions Amendment Bill passed in Lok Sabha
In an attempt to restrain the movement of black money, the Benami Transactions Amendment Bill has been passed by the Lok Sabha. The legislation gives the Government power to seize Benami (under the name of a fictitious person/third party) properties and also charge the accused. However, during a discussion on the same, Finance Minister Arun Jaitley said genuine religious institutions would be exempted.
About the Benami Transactions Act
The Benami Transactions (Prohibition) Act, 1988 prohibits Benami transactions (transactions done under the name of fictitious persons/third parties); it also gives provisions to the Government to acquire such properties. The Act was enforced on 5 September 1988.
Amendments to the 1988 Act
In May'15, the Government introduced the Benami Transactions (Prohibition) Amendment Bill, 2015 in Lok Sabha. It sought to amend the 1988 Benami Transactions Act, which prohibited Benami transactions and gave provisions for confiscating such properties. On 20 Jul'16, the Union Cabinet approved proposing amendments to the Bill to strengthen it in legal and administrative terms and overcome difficulties that could arise in its implementation.
What does the Bill seek?
The 2015 Bill seeks the amendment of the Benami transaction's definition; establishment of adjudicating authorities and Appellate Tribunal in order to deal with such transactions; and specification of the penalty for entering into such transactions.
Genuine religious properties
Concerns over religious properties were raised in the House; Jaitley assured: "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."
Exemptions not an excuse for evading tax
Though Jaitley assured religious properties would be exempted, he warned that such exemptions couldn't be an excuse for evading tax. The Government brought the bill in 2015 after which it had been referred to a standing committee. The UPA Government had introduced an amendment bill to the 1988 Act in 2011; however, it had lapsed as the Government's Lok Sabha term ended in 2014.
Illegal businesses
Arun Jaitley said: "If you make any illegal business out of it (religious trusts/properties), if you create a fake religious sect and start keeping Benami property, then Government won't exempt it, so please don't do that."
Questions over the Bill were raised
Kalyan Bannerjee of Trinamool Congress said the Government should have come up with a new law to replace the 1988 Act instead of an amendment. Some members said Benami assets should be under the control of State Governments; Jaitley replied the power would be with the Centre as it was a Central law. Congress' SP Muddahanumegowda said the law didn't provide protection to whistle-blowers.
Jaitley's response to the questions and suggestions
Jaitley said the Government didn't come up with a fresh law as that would have given "immunity" to those who acquired Benami properties during 1988-2016. The words in the bill "known sources of income" were changed to "known sources". It provides a 25% penalty of the asset's fair value and seven years imprisonment; 'property' will cover movable, immovable, tangible and intangible properties.
