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Cabinet clears revised Bill on domestic black money

It will be taken up in the Parliament in the monsoon session

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In a sequel to the passage of black money Bill dealing with undisclosed illegal income stashed abroad in the Lok Sabha early this week, the Union Cabinet on Wednesday cleared the amendment of Benami Transaction (Prohibition) Act to give it more teeth to tackle the black money menace within the country.

Shaktikanta Das, revenue secretary, said the Bill, which will provide for attachment and confiscation of assets held through fictitious entities, is expected to be taken up in the Parliament in the monsoon session.
"We expect this (Benami Bill) to be taken up in the next (Parliament) session. It will be considered by it and once approved by it, the Act will be notified," he said.

According to Das the revised bill had not carried out any "consequential changes" except for a few alteration in the "miscellaneous" segment.

The Bill, which had lapsed, has been given muscle by making it more stringent with imprisonment up to seven years and a fine of 25% of the value of the benami property.

Experts feel the amendments introduced in the bill would act as deterrent for the offenders in such crimes.

Gaurav Karnik, tax partner, EY, said the law, in its new form, would be specifically helpful in drawing out black money from the real estate sector, where most of the illegal money finds its way.

"It would be especially good for getting illegal money in the real estate sector into the economy as a lot of unaccounted income is parked in properties through benami entities. In general, this law would be good in improving transparency in any transaction,"

According to income tax sources, the law, in its new avatar, will enhance the ability to trail the original source of funding and even attach properties even though the original owner can escape the law by stating that the property doesn't belong to him.

Several thousands of such benami transactions are pending action due to loopholes in the law, but the revised Bill has given more teeth to it for confiscation of such properties and curb generation of black money in the real estate sector, which is the root cause of unaccounted money in the system.

"As of now, 35% of land deal and high end properties are transacted in cash and balance 65% through legal channel. The bill will discourage the cash transaction and lead to a correction in property prices that have artificially soared," said Pankaj Kapoor, managing director, Liases Foras.

Vikram Babbar, director, fraud investigation and dispute services, EY India, said the Bill was a strong and sure step towards curbing money laundering concerns at a local level.

"This would act as an impetus specifically in tracing benami assets in case of corporate borrowers siphoning funds and defrauding the banking system," he said.

The amended Benami Transactions (Prohibition) Bill will replace the existing Act of 1998 after the lapse of the 2011 Bill.

(With inputs from Shrimi Choudhary)

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