The document compares amendments proposed by the Indian government to the Benami Transactions (Prohibition) Amendment Bill of 2015. Key proposed amendments include narrowing the definition of benami transactions, exempting certain property transfers where stamp duty was paid, and allowing authorized representatives during adjudication proceedings. The Standing Committee on Finance had recommended some of these amendments, including qualifications for the Appellate Tribunal Chairperson. The Committee also suggested addressing unaccounted wealth through income tax laws and digitizing land records instead of a separate benami law.

1. Mandira Kala Aravind Gayam
mandira@prsindia.org aravind@prsindia.org
July 26, 2016
PRS Legislative ResearchInstitute for Policy Research Studies
3rd
Floor, Gandharva Mahavidyalaya 212, Deen Dayal Upadhyaya Marg New Delhi – 110002
Tel: (011) 43434035-36, 23234801-02  www.prsindia.org
Amendments to the Benami Transactions Prohibition (Amendment) Bill, 2015
The Benami Transactions (Prohibition) Amendment Bill, 2015 was introduced in Lok Sabha on May 13, 2015 by the Minister of Finance Mr. Arun Jaitley. The Bill seeks to
amend the Benami Transactions Prohibition Act, 1988 to: (i) amend the definition of benami transactions, (ii) establish adjudicating authorities and an Appellate Tribunal to
deal with benami transactions, and (iii) specify the penalty for entering into benami transactions. The Standing Committee on Finance examined the Bill and submitted its
report on April 28, 2016. The government has proposed amendments to the Bill on July 22, 2016. The following table compares the recommendations of the Standing
Committee to the proposed amendments.
Table 1: Comparison of the Benami Transactions Bill 2015, recommendations of the Standing Committee, and amendments circulated
Benami Transactions (Prohibition) Amendment Bill 2015 Recommendations of the Standing Committee Amendments proposed by the government (July 22, 2016)
Definition of benami transactions – Clause 4
The Act defines a benami transaction as a transaction where a
property is held by or transferred to a person, but has been provided
for or paid by another person.
The definition should be amended to exempt bonafide transaction
where the consideration has been paid. A transaction should not be
considered benami if it involves transfer of immovable property, and
is entered by: (i) a registered agreement of sale, (ii) a registered
General Power of Attorney, or (iii) registered development
agreement on payment of stamp duty.
Standing Committee (SC) recommendation accepted.
Following transaction is not considered benami: A contract for
transfer of property which has been partly executed under the
Transfer of Property Act, 1882. However, certain conditions should
be met, including: i) stamp duty on such a transaction has been paid,
and ii) the contract has been registered.
Exemptions for benami transactions – Clause 4
Certain transactions are exempted from being considered as benami
transactions. These include an individual purchasing property in the
name of his family members using his ‘known sources of income’.
Replace ‘known sources of income’ with ‘known sources’. SC recommendation accepted.
Conformity to Income Declaration Scheme, Finance Act 2016 – Clause 8
A benami property shall not be re-transferred by the benamidar (who
is holding the property) to the beneficial owner (who provided the
consideration for the transaction), or any person representing him. If
the benami property is re-transferred, it is considered void.
No recommendation. If the benami property is disclosed as part of the Income Disclosure
Scheme of the Finance Act, 2016, then the corresponding provisions
of the Bill will not be applicable.
Rights on confiscated properties – Clause 27(3)
When benami property is confiscated all the rights and titles shall
vest with the central government.
Since land is a state subject, it would be appropriate for rights on
confiscated properties to vest with state governments.
No amendment proposed.
Time limit for Initiating Officer to initiate an investigation – Clause 24(1)
If the Initiating Officer suspects a particular transaction is a benami
transaction, he may initiate investigation against such transaction by
issuing a notice against the benamidar.
The investigation should be initiated and completed within a
specified time frame.
No amendment proposed.
Notice to beneficial owner – Clause 24(2)
If the Initiating Officer believes a transaction to be a benami
transaction, he shall issue a notice to the benamidar, and the
beneficial owner.
No recommendation. Notice shall be served to the beneficial owner, if his identity is
known.

2. Time provided by Adjudicating Authority to furnish documents – Clause 26(1) proviso
The Adjudicating Authority may require a benamidar, or a beneficial
owner to furnish documents necessary for an investigation within a
30 day time period.
The 30 day time period should be extended to 3 months, considering
the state of land records in rural India.
No amendment proposed.
Time limit for disposing of the appeal by an Appellate Tribunal - Clause 46(1)
Appeals against the decisions of the Adjudicating Authority may be
filed with the Appellate Tribunal.
A time limit of two years should be imposed for the disposal of the
appeal.
No amendment proposed.
Qualifications of Chairperson of the Appellate Tribunal – Clause 32(1)
A sitting or former Judge of the High Court will be qualified to be
Chairperson of the Appellate Tribunal.
The Chairperson should have at least five years of experience as a
High Court Judge.
SC recommendation accepted.
Right to representation during adjudication of benami property – Clause 28(8) (new section added)
During adjudication of benami properties, the Adjudicating Authority
shall provide the benamidar or any person claiming to be the owner
of the property, an opportunity to be heard.
An authorised representative should be allowed to represent the
benamidar or any person claiming to be the owner of the property.
SC recommendation accepted. An authorised representative will
include:
 A person who is relative of the benamidar, or regularly
employed by the benamidar, or
 Any officer of the scheduled bank with which the benamidar
maintains an account, or
 Any legal practitioner who is entitled to practice in any civil court
in India, or
 Any person who has passed any accountancy exam, or
 Any person who has acquired such educational qualifications
as specified by the Board (Central Board of Direct Taxes).
Sources: Benami Transactions Prohibition (Amendment) Bill, 2015; 28th
Report of the Standing Committee on Finance; Notice of Amendments – The Benami Transactions (Prohibition) Amendment Bill, 2015; PRS.
Other observations of the Standing Committee
The Standing Committee made the following additional recommendations:
 Need for a new legislation: The Income Tax Act, 1961 has adequate provisions to deal with issues of tax evasion and unaccounted wealth, which the Bill is seeking to
address. The proposed Bill might result in multiplicity of such provisions. Certain amendments to the Income Tax Act, 1961 to account for unexplained investments
made under benami names, will achieve the objectives of the Bill, instead of creating a separate law.
 Digitization of land records: The Committee noted that benami transactions could be preempted and eliminated by digitization of land records. It noted that
amendments in the Transfer of Property Act, 1882 and Registration Act, 1908 may be made to provide for: i) online registration of all immovable properties, ii) linkage
of Aadhar and PAN numbers of all parties involved in purchase of a property, and iii) sharing of data by the registration authorities with tax authorities.
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