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.
The aim of revamping the Act is to answer such questions, the sources said adding that the revamped act will define a benami transaction and elaborate on the competent authority to adjudicate it.
Any transaction with a benami colour will be adjudicated by a Commissioner of Income Tax rank officer and an assessing officer (AO) rank will execute the act. He will be authorised to issue show cause notices and attach and confiscate a property, the sources said. The new act will also elaborate on the process of recovery and punishment.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018