Centre likely to set threshold for Benami deals in Budget session

The Centre may introduce a value threshold for “Ben­ami deals”, beyond which such transactions shall be invalidated and assets involved confiscated. The current legislation does not provide for any such cap.

“Some provisions of the Benami Transaction (Prohibition) Amend­ment Act of 2016 are being examined and might be reworked to streamline to crack down on benami properties,” said a senior government official.

The Central Board of Direct Taxes (CBDT) is learnt to have suggested changes to the legislation to remove anomalies while ensuring that enforcement does not lead to harassment, according to an another official. He said there were suggestions on capping the value of such deals. These could be proposed in the Budget Session of Parlia­ment, the official added. Any immovable property sold at Rs 50 lakh and above is considered a high-value transaction.

However, in the case of benami deals, the limit could be higher, a source indicated. Further, the CBDT may come up with a procedure for confiscating such benami properties, ensuring that it would catch owners who stay anonymous and generate and hide illicit wealth. 

The move follows the recent decision by the Supreme Court, which held the 2016 amendment to benami transactions law could not be applied retrospectively and quashed certain provisions on criminal offences, including stiff punishments like jail terms. The verdict has automatically set aside all prosecutions under this law till amendments were introduced to it in 2016. Benami properties are those in which the beneficiary is not the one in whose name the property has been purchased.

According to the official data, as of May 31, 2019, show-cause notices were issued in more than 2,100 cases involving benami properties , valued at over Rs 9,600 crore.

A majority of those were issued for transactions that happened before the amended law came into force. The Benami Property Transaction Act was first enacted in 1988. The court struck down the provisions awarding imprisonment for a term that could be up to three years, or a fine, or both.

The court termed illegal the punitive action various agencies have taken through a retrospective application of the 2016 law, without sanction from an established procedure, and held the Act unconstitutional.

The amended law brought transactions like cash transfers, property deals, and share issues within its ambit.