The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved amending the Benami Transactions (Prohibition) Act, 1988 aimed at curbing the generation and laundering of black money within the country.
An official statement issued after the Cabinet meeting said the Benami Transactions (Prohibition) (Amendment) Bill, 2015, which would be moved in Parliament would provide for attachment and confiscation of benami properties as well as for fine with imprisonment.
While the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 passed by both Houses Parliament provides for stringent punishment for stashing tax evaded funds in overseas accounts, the Bill on benami transactions targets the parallel economy within the country.
There is no accurate estimate of the extent of black money generated in India. As per a white paper on black money tabled in Parliament in 2012 by the then finance minister Pranab Mukherjee, many Indians could be routing their unaccounted wealth into local stock markets through opaque and multi-layered instruments called participatory notes (P-notes) issued by foreign institutional investors. Around 10-15% of FII investment into India is routed through P-notes.
The report had also pointed out that although the source of generation of black money may lie in any sphere of economic activity, sectors like real estate, bullion and jewellery market, financial markets, public procurement, non-profit organizations, trade, international transactions involving tax havens, and the informal service sector are more vulnerable to this menace.
In conjunction with the Prevention o f Money Laundering Act, the Benami Transactions (Prohibition) Bill will help the government crackdown on black money, said KV Karthik, senior director, Deloitte.