New Delhi: The new law to prohibit benami transactions, which also provides for up to 7 years imprisonment and penalty for those indulging in such activities, will come into effect from November 1.
With a view to curb the menace of black money, Parliament in August had passed the Benami Transactions (Prohibition) Act, after assurance from Finance Minister Arun Jaitley that genuine religious trusts will be kept out of the purview of the legislation.
"The rules and all the provisions of the Benami Transactions (Prohibition) Act shall come into force on November 1, 2016. After coming into effect, the existing Benami Transactions (Prohibition) Act, 1988, shall be renamed as the Prohibition of Benami Property Transactions Act, 1988," a CBDT statement said.
While the existing law provides for up to three years of imprisonment or fine or both for carrying out benami transactions, the amended legislation would provide for seven years imprisonment and fine.
The Act defines benami transactions, prohibits them and further provides that any violation is punishable with imprisonment and fine. The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner.
"Properties held benami are liable for confiscation by the government without payment of compensation," it said.
An appellate mechanism has been provided under the Act in the form of Adjudicating Authority and Appellate Tribunal.
A Joint or Additional Commissioner of I-T, an Assistant or Deputy Commissioner and a Tax Recovery Officer in each Principal CCIT Region have been notified to perform the functions and exercise the powers of the Approving Authority, Initiating Officer and Administrator, respectively under the Act, the statement said.
While the 1988 Act has nine sections, the amended law would have 71 sections.
"There is Section 58 under the law which clearly states that in case of charitable or religious organisation properties, the government has power to exempt those," Jaitley had said responding to concerns of some Parliament members about the applicability of the amended law on properties in the name of holy books and deities.
"If there is a genuine property which belongs to a church or a mosque or a gurdwara or a temple, section 58 says that the government has the power to exempt it," he had said.