Government to Enhance Scope of Benami Law to Identify Fake Companies
Government to Enhance Scope of Benami Law to Identify Fake Companies
Even after the government’s major steps to curb black money, there are persons who own property or carry out transactions under the name of another faceless person, which usually includes the poor labourers and the slum dwellers in villages. Such Transactions or persons are known as ‘Benami’, which means ‘ No Name.’
These transactions are often done by using the names of fake people, while the real owners stay hidden. The Benami Transactions (Prohibition) Act, 1988, was introduced to prohibit such benami transactions. The act was implemented on November 1, 2016.
To introduce more strictness under the benami law, the government may soon give more power to tax officials to identify people who hide their property ownership under benami transactions. A panel formed by the Central Board of Direct Taxes (CBDT) has suggested some big changes to the current benami law to make it stronger.
Suggested Changes
As per the report submitted by CBDT’s panel, the dummy directors in fake companies holding benami assets should be identified. Tax officials should look out for companies where directors do not have income and shareholders do not file tax returns, or where the unsecured loan is more than the share capital. The board has suggested that the tax officers should be allowed to have access to the Aadhaar Database, state property registries, and the Parivahan Data of vehicles and driving licences. If the hidden benami property cannot be traced, the law should allow authorities to seize other assets of the real owner.
The committee has also suggested linking the income tax department’s ‘insight’ portal with the Aadhaar database. Many benamidars do not have a PAN, but their Aadhaar may be linked to property, bank accounts, and vehicles. So, giving tax officials access to Aadhaar-linked details could help them track down hidden assets. If there is a privacy concern, then the access can be limited to ‘view only‘ details of Aadhaar, like immovable properties and bank accounts.
The committee has suggested that the tax records related to the additions made under sections 68, 69, and 69A must be shared with the Benami wing. Apart from this, other suggestions were also made regarding the real-time use of suspicious transactions identified by the financial intelligence units. It also recommends profiling private vault account holders, as some of these may be benamidars. Additionally, the committee has suggested tracking the cryptocurrency transfers.
Experts say that the new steps are tough but will help to fill gaps in the current system and support the ongoing efforts of the government, like the digitisation of land.