Thursday, September 23, 2010

Benami Transaction Act in the news again

From Indian Express Govt revamping Benami Transaction Act to keep check on black money:
"Worried over the speedy growth of a parallel economy in the country, with black money amounting to almost one-fourth of India’s GDP, the government is planning to crack down on such illegal transactions, at least those related to property. The finance ministry is revamping the Benami Transaction Act, 1988, to keep a check on such transactions, which are entered into for avoiding taxes and hiding accumulated assets.

Though there exists the Benami Transactions (Prohibition) Act, 1988, prohibiting benami transactions and providing for government acquisition of the property held benami, the rules to make confiscation of property and other provisions effective have not been issued due to several lacunae in the Act.

Sources told The Indian Express that the Central Board of Direct Taxes has started working on the Act, which was though enacted 22 years ago, it has not been implemented as yet because of several loopholes in the Act. For the same reason, the rules for the Act were also not framed and meanwhile, the parallel economy in India swelled to around Rs 15 lakh crore, according to a World Bank study called ‘Shadow Economies All over the World’. “The earlier act was very sketchy and had too many loopholes. It lacked clarity and there were deficiencies too. There was no clarity on recovery and punishment and no body knew who is the competent authority to implement the act, under what circumstances should a property be confiscated, what will happen to agricultural property etc” the sources said."
Here is Introduction to The Benami Transaction (Prohibition) Act, 1988.
From an earlier Press Release of IRI (September, 2009)Forging a Public Movement for Recovery of India’s Stolen Assets (Black Money) from Foreign Countries:You are aware that several reports have appeared in the Press in the last one year or so suggesting that Indian nationals held $1456 billion (about Rs.70 lakh crore) in secret Swiss Bank Accounts....Recently, Swiss Authorities have also reportedly told Government of India that they are not going to give names if India just throws the Telephone Directory at them! It is strange that despite Government being seized of the matter since 2008, it has, so far, not presented specific cases to them. Recovery of India’s public money from foreign countries especially Switzerland can go a long way in setting the country firmly on the road to becoming an economic superpower!" and recommends among other things "viii. Prescribe procedure for confiscation of benami property under Section 8 of the Benami Transaction Prohibition Act (BTPA), 1988."

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