Cabinet approves new act to deal with benami transactions

The government on Thursday approved a proposal to bring a newlegislation for stricter control over benami transactions amid the UPA regimefacing heat over the black money issue from various quarters.

The decision was taken at a Cabinet meeting chaired by PrimeMinister Manmohan Singh.

It was decided that subsequently, a new Benami transactions(Prohibition) Bill 2011 will replace the existing Benami Transactions(Prohibition) Act, 1988.

"The new Bill contains elaborate provisions dealingwith the definition of benami transaction and benami property, prohibitedbenami transactions, consequences of entering into a prohibited benamitransaction and the procedure for implementing the benami law,"Information and Broadcasting Minister Ambika Soni said.

Under the proposed new law, anyone violating the rule can bejailed for not less than six months, which may be extended to two years andalso be liable to a fine.

Explaining the need for a fresh legislation, the ministersaid: "It was found that owing to infirmities in the (existing)legislation, formulation of rules would not be possible without a comprehensivelegislation by repealing the Act".

"Properties held by coparcener in a Hindu undividedfamily and property held by a person in fiduciary capacity are excluded fromthe definition of benami transaction", she said.

The Minister further pointed out that "propertiesacquired by an individual in the name of spouse, brother or sister or any otherlineal ascendant or descendant are benami transactions which are notprohibited".

Benami transactions are one of the notorious sources ofcirculation and investment of black money. The government has been facing heaton black money from the Supreme Court, civil society and Opposition for notdoing enough to deal the menace.