In a bid to cleanse the economy, the Indian government had demonetized 86% of the currency in circulation and tried to bring every rupee accounted for! In addition, the government has promised that the note ban was just the first step and many more such radical steps would follow to ensure that the creation and circulation of black money would be restricted. To follow up matter further, Government plans to enforce Penal Provisions for Benami Transactions Prohibition Act strictly
After the November 8, 2016 note ban decision, the Indian government has now set its eyes on the irregularities committed during the note ban days. There were wide spread news of huge amounts of cash deposited into other’s account, accounts that were inactive for long, etc. The Income tax department responsible for tracking such transactions has been tracking many such incidents of sudden huge cash deposits into otherwise inactive accounts, especially after November 8, 2016.
Despite repeated and widespread advertisement by government not to resort to any fraudulent transactions, many instances of fraudulent deposits of black money into fictitious accounts have emerged, forcing the government to take stern action.
What are Benami Transactions? – What are Penal Provisions for Benami Transactions ?
In general, accumulating property or assets including movable, immovable, tangible in the name of family members, relatives, friends, etc., for which no proper documentation as to the sources of income is considered Benami transaction or benami property. In other words, benami property is a property owned by a person other than the one who paid for it, using unaccounted money.
The Benami laws of 1988 have been strengthened further with an amendment in 2016 to offer more powers to the enforcing authorities, IT sleuths.
Amendment to Benami Transactions Prohibition Act empowers Government to Confiscate the Property
The 2016 amendment to the benami transactions Prohibition act specifies what constitutes Benami transaction and the rights of the parties of such a transactions. Property owned by a person but was paid for another person will confiscate such properties confiscated by the government.
Economists say, corrupt politicians and government officials find this a safe way to channelize their unaccounted, corrupt money by purchasing different forms of movable and immovable property against fictitious names.
Who will be affected by the New Benami transaction Prohibition Act 2016?
As long as property owners can prove their sources of income and prove it with evidence using proper tax returns and income tax assessments there is no need to worry. The amendment will effect only those who have abused the law to hide their unaccounted, black money by acquiring property (Moveable and immovable) in the name of others – family member, relatives, friends, etc.
The various government officials – officials form the Land records department, district registrars-under the guidance of Income tax department will work towards finding and unearthing the benami transactions for the past 70 years.
Impact of the New Amendments to the Benami Transactions act of 1988?
Amidst rumors of widespread fraud, benami transactions during the note ban, where in people with black money resorted to fraudulent deposits of their old 500 and 1000 notes into the otherwise inactive bank accounts of their poor maids, servants, friends, relatives to safely turn their money into white money.
More Powers to Income Tax Department to unearth Benami Transactions
To unearth and confiscate such black money, the government has decided to offer more powers to the Income tax department.
The amended benami transactions prohibitions act of 2016 allows for more rigorous and stringent punishments for such offenders, if proven of their crime, these offenders could now face up to 7 year jail term in addition to heavy penalty.
Thus far, the Income Tax department has served 87 notices and seized crores of rupees in about 42 cases where they see some suspicious activity. Both the parties – the depositor, whose account is used to deposit black money and the owner of the money – to such fraud transactions will face criminal charges.