Now, Centre moves to crack down on black money stashed in country

After introducing a Bill for curbing generation of black money overseas, the Centre intends to bring in an equally stringent legislation against domestic black money.

To make the new Benami Transaction (Prohibition) Bill more effective, the Government intends to incorporate recommendations made by the previous Parliamentary panel on the same. The Bill is scheduled to be introduced during the second phase of the Budget session starting April 20.

“We plan to take key recommendations given by the Standing Committee on Finance in 15th Lok Sabha on the Benami Transaction (Prohibition) Bill, 2011,” a senior Finance Ministry official told BusinessLine . The previous Standing Committee was chaired by former Finance Minister and senior BJP leader Yashwant Sinha.

The official said that the Cabinet will soon take up the Bill for consideration. This will be third legislative effort to prohibit benami transactions. The first law was enacted in 1988. However, despite getting Presidential assent, successive Governments failed to notify the rules. As a result, the Act could not be made operational. In 2011, the UPA Government introduced a new Bill, which also was vetted by the Parliamentary Committee, but could not be passed. The Bill lapsed after the Lok Sabha was dissolved.

However, the official is optimistic that the proposed legislation will not meet the same fate now. First, the Government will not have any difficulty in getting the Bill passed in the Lok Sabha as it is in majority and second, the Opposition is unlikely to oppose the Bill in the Rajya Sabha (though the Government is in minority).

Besides, keeping in mind the fate of the 1988 Act, the new Bill is likely to prescribe a maximum time limit for framing rules.

The earlier Act defined benami transaction as, “any transaction in which property is transferred to one person for a consideration paid or provided by another person”. The 2011 Bill listed the reasons why a person does this — to defeat the provisions of law, avoid payment of statutory dues or to avoid payment to creditors.

The Bill also diluted the punishment for the beneficial owner or benamidar and any other person who abets or induces any person to enter into a benami transaction and holds benami property. The 1988 Act stated that whosoever entered into any benami transaction will be punishable with imprisonment up to three years which was to up to two years in 2011 Bill. The fine, however, was retained.

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