What are Benami Transactions? - Benami Transactions (Prohibition) Amended Act, 2016 (Download PDF)

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The Benami Transactions (Prohibition) Act, 1988 (the Act) was comprehensively amended through the Benami Transactions (Prohibition) Amended Act, 2016 to provide for an effective regime for prohibition of benami transactions.

Authority Structure for BENAMI Transactions

Authority Structure for BENAMI Transactions

Authority Structure for BENAMI Transactions

  • The Act prohibits benami transactions
  • Empowers authorities to provisionally attach and eventually confiscate the benami properties.
  • Provides for prosecution of guilty for the offence of benami transaction by the competent court with rigorous imprisonment for a term not less than one year but which may extend to 7 years and fine upto 25 % of the fair market value of the property.
  • Government has set up 24 Benami Prohibition Units (BPUs) for taking action under the Benami Act.

What Are Benami Transactions?

In a ‘Benami’ transaction property is transferred to one person for a consideration paid by another person without due registration. Such transactions contribute to the Indian black money problem. The act bans all benami transactions and gives the government the right to recover property held benami without paying any compensation.

Assets of any kind — movable, immovable, tangible, intangible, any right or interest, or legal documents. As such, even gold or financial securities could qualify to be benami.

What Constitutes Benami Property?

Benami property does not meet following criteria:

  • Property held in the name of spouse or child for which the amount is paid out of known sources of income
  • A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income
  • Property held by someone in a fiduciary capacity

- Published/Last Modified on: August 12, 2017

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