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Benami Transactions (Prohibition) Act, 1988 – Meaning & Provisions

Updated on Nov 27, 2019 – 12:16:34 PM

In the past few years, we have seen the government major steps to end black money dealings through various measures such as the black money act, Income Disclosure Scheme, demonetization, etc. In this context, the terms ‘Benami property’, ‘Benami Act’, ‘Benami transactions’, etc. have been making headlines for quite some time now. What does the term ‘Benami’ really mean? The term ‘Benami’ in Hindi translates to ‘no-name’ or ‘without a name’. Benami transactions or Benami property would be one where a person’s own name is not used but the name of another person or a fictitious person is used instead.

Legislative background

The original law relating to Benami transactions was laid down in The Benami Transactions (Prohibition) Act, 1988. This Act consisted of only eight sections. The same was later amended by The Benami Transactions (Prohibition) Amendment Act, 2016 which was made up of 72 Sections.

What is Benami Property?

Any property, whether movable or immovable, tangible or intangible, which has been the subject matter of a Benami transaction, is a Benami property. This would also include the consideration received from such property. Benami property would also include the right or such other document evidencing title or interest in such property.

What is a Benami transaction?

Let us understand what a Benami transaction is and who are the parties involved with this example:


In a Benami transaction, the property is transferred or held by one person (Mr A, the ‘Benamidar’) and the consideration for such property is paid by another person (Mr B, the ‘beneficial owner’) for whose benefit such property is held.

The following transactions also fall under the definition of Benami transactions:


The following type of transactions will not be treated as Benami transactions:

  1. Property is held by a member of the HUF for the benefit of the HUF and the consideration is paid from the known sources of income of such HUF;
  2. A person who holds the property in a fiduciary capacity for the other person – for example, a trustee for the trust, a director for his company, a depository/depository participant for a trader (holder of shares in Demat form), etc.;
  3. An individual holding property in the name of his spouse or child and where the consideration is paid from the known sources of such individual ;
  4. An individual holding property jointly with a brother, sister or lineal ascendant/descendant and where the consideration is paid from the known sources of such individual.

Instances of Benami transactions

Punishment under the Benami act

The various forms of punishment under the Benami Act are as follows:

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