The Central Board of Direct Taxes (CBDT) is considering sweeping amendments to the Prohibition of Benami Property Transactions Act, 1988, to plug loopholes and tighten enforcement. A panel constituted by the CBDT has submitted a report recommending sterner provisions, including wider data access for tax officials and stricter penalties for real beneficiaries hiding behind faceless fronts.
Aadhaar and Property Data Access for Tracking
According to the committee, benami units of the Income Tax Department should be given access to the Aadhaar database, state property registries, and the Parivahan vehicle database to identify hidden assets. Currently, the IT department's Insight portal provides a consolidated view of PAN-linked information such as property purchases, bank accounts, and demat accounts. However, officials point out that many benamidars-slum dwellers, farmers, and daily wage labourers used as fronts do not hold PAN cards.
"With Aadhaar being widely used across registries, it would be of immense value if benami units could access Aadhaar-linked details of immovable property, vehicles and bank accounts. Even a restricted 'view-only' access would help curb misuse," an official said.
Confiscation of Other Assets
The panel has also recommended amending the law to allow confiscation of other traceable assets of the actual beneficiary if the benami property itself cannot be located. The move is aimed at preventing offenders from evading the law by liquidating or diverting benami assets.
Shell Companies Under Lens
Shell companies remain a major concern for the authorities. The report has suggested that officials should identify "dummy directors" and probe companies where:
- More than half of directors have no declared income;
- Majority shareholders do not file tax returns;
- Unsecured loans far exceed the company's share capital.
Such companies, the panel believes, are often used to hold or launder benami assets.
Expanded Data Sharing and Monitoring
The report recommends that tax records related to unexplained cash credits, investments, and money under Sections 68, 69, and 69A of the Income-tax Act be shared with the Benami wing, especially in cases upheld at the appellate level. Other measures include:
- Mandatory login rights for states to share property documents with central agencies;
- Real-time use of suspicious transaction reports flagged by the Financial Intelligence Unit (FIU);
- Profiling private vault account holders to identify potential benamidars;
- Tracking cryptocurrency transfers to prevent misuse.
Expert Views
Tax experts say the proposals are stringent but necessary. "The suggested reforms align with broader digitisation initiatives such as land record digitisation and inter-agency data sharing. They aim to remove interpretational ambiguities that have allowed offenders to exploit loopholes," one expert said.
Another cautioned, however, that while shell companies must be monitored closely, the new policy should not result in blanket powers for officials. "The I-T Act 2025 may enable uniform disclosure norms to track benami transactions, but care must be taken to balance enforcement with taxpayer rights," he added.
Background
The Prohibition of Benami Property Transactions Act, originally enacted in 1988, came into full effect on November 1, 2016. Since then, the government has stepped up its crackdown on benami deals, which involve assets held in the names of fronts while the actual beneficiaries remain hidden.
If accepted, the CBDT's latest proposals could mark the most significant tightening of the benami law since 2016, bolstering the government's drive against black money, shell companies, and illicit asset transfers.
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