Aiming to clamp down on benami transactions, the government is set to give more teeth to the Benami Transactions (Prohibition) Act, 1988. The proposed amendments to the Act, which are being given finishing touches, seek to redefine a benami property as one belonging to a non-existent person without known sources of income.
A confiscating authority will be set up as per the provisions of the Act. The authority will be empowered to deem (or, hold) a property benami and confiscate it if the owner does not have a proven source of earning.
As per the present Act, a benami transaction means a deal in which a property is transferred to a person for a consideration paid or provided by another person. In other words, the property is not transferred in the name of the person who pays the purchase price.
A benami property could be of any kind, movable or immovable, tangible or intangible, and includes any right or interest in such property. The deeming provision will make it easier for the confiscating authority to prove a benami transaction.
Importantly, powers of the confiscating authority as well as the rules would now be a part of the Act itself, sources told ET. This is an important variation from the Act, which does not lay down detailed rules. Instead, the Act gives power to the government to make rules that would provide for a competent authority to acquire such properties, and the manner in which they have to be acquired. The Central Board of Direct Taxes, the implementing authority for the Act, was to frame the rules.
This was largely the reason why the 20-year-old Benami Act is still to come into effect, as rules to operationally it could not be framed. It was felt that the powers, which were to be derived from rules, should flow from the Act itself to make it more effective, they said.
The proposed amendments to the Act will be vetted by the law ministry before they go to the Cabinet for approval. If the suggested changes are approved, they would go a long way in curbing such transactions that are rampant in real estate.
CRUNCH TIME
Govt. set to strengthen Benami Transactions (Prohibition) Act
Changes to redefine a benami property as one belonging to a non-existent person without known sources of income
A confiscating authority will be set up as per the provisions of the Benami Act
Authority will be empowered to confiscate a benami property if the owner does not have a proven source of earning
Courtesy:- ET dtd:- 25th August 2008
