Benami transactions should not be considered an offence although they need to be discouraged. This is the view of the Finance Ministry. This runs counter to thinking in the Home Ministry.
Official sources told Business Line that the Finance Ministry circulated a note on July 11giving point-by-point detailed replies to objections raised by the Home Ministry.
Cabinet meet
A final decision on what exactly should be the contours of the Benami Transactions (Prohibition) Bill is likely to become clear on Thursday after a meeting of the Union Cabinet which has already deferred the proposal twice. This Bill will replace the Benami Transaction (Prohibition) Act, 1988. If cleared tomorrow, it is likely to be tabled in Parliament during the monsoon session.
While the Home Ministry wants to declare benami transaction as illegal, the Finance Ministry feels otherwise. It points out that benami transaction involves some kind of liability.
Exemption
The Home Ministry's has also objected to Clause 30 of the draft Bill which deals with exemption. It feels that the exemptions offered are very broad. It wants the Government to specify who all will be exempt from benami ownership.
According to sources, the Finance Ministry has given three arguments in reply to these objections. It has pointed out that exemption will be there only in unforeseen situations.
It has also reasoned that exemption will not be blind-folded. The broad definition or any change in the definition of exemption will need Parliament's approval.
Sources said that the Home Ministry's objection on clause 16.2 of the draft Bill has also been countered by the Finance Ministry.
This particular clause proposes to deal with the ownership of the benami property.
The Home Ministry says that people do not know that a benami transaction has been made in his or her name, but the Finance Ministry argues that as soon benami is identified, the law of land will be applicable.
The Finance Ministry has also said that the question on proving intentional ownership will rest with whoever is the ultimate beneficiary partner.