Press Information Bureau

Government of India

Ministry of Finance

21-July-2011 13:26 IST

Enactment of a new legislation in place of Benami Transactions (Prohibition) Act, 1988 - Introduction of the Benami Transactions (Prohibition ) Bill, 2011

The Union Cabinet today approved the proposal for the enactment of a new legislation in the form of the Benami Transactions (Prohibition) Bill, 2011 to replace the existing Benami Transactions (Prohibition) Act, 1988 and for its introduction in Parliament. During the process of formulating the rules for implementing certain provisions of the present Act which was passed in 1988, it was found that owing to infirmities in the legislation, formulation of the rules would not be possible without a comprehensive legislation by repealing the Act.

The Bill contains elaborate provisions dealing with the definition of benami transaction and benami property, prohibited benami transactions, consequences of entering into a prohibited benami transaction and the procedure for implementing the benami law.

Properties held by a coparcener in a Hindu undivided family and property held by a person in fiduciary capacity are excluded from the definition of benami transaction. Further, properties acquired by an individual in the name of spouse, brother or sister or any lineal ascendant or descendant are benami transactions which are not prohibited. Consequently, they are not subject to penal provisions.

Where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into such benami transaction, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to two years and shall also be liable to a fine.

A benami property shall also be liable for confiscation by the Adjudicating Authority after the person concerned has been given due opportunity of being heard.

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AD/SK

Benami transaction prohibition expands offences and imposes imprisonment, fines and property confiscation for transactions to defeat law. The Bill replaces the 1988 Act with a comprehensive regime defining benami transaction and benami property, excluding coparcener-held HUF property and fiduciary holdings, and treating acquisitions in specified close relatives' names as non-prohibited benami transactions. It penalises benami transactions entered into to defeat law, evade statutory dues or avoid creditors by subjecting beneficial owners, benamidars and abettors to imprisonment and fine, and empowers an Adjudicating Authority to confiscate benami property after affording a hearing.