Benami Property - Benami Transaction Act

The meaning of Benami is 'no name' or 'without a name.' A Benami property is one in which a person uses a fake identity instead of his/her original identity while purchasing a property or doing any transaction. 

Due to the surge in these kinds of cases, the Indian government passed the Benami Transactions (Prohibition) Act in 1988 with the goal of preventing Benami transactions. The Benami Transactions (Prohibition) Act, 1988, made Benami transactions illegal in India for the first time. The restriction on Benami transactions was enacted to dissuade people from using unethical motives, including money laundering, tax fraud, and so on.

• If a property's title is transferred under a fake name and possession is held by someone who retains the property willfully for the direct or indirect advantage of the beneficial owner, that person should be held accountable as well.

• No one may participate in a Benami transaction or acquire property in the name of his wife or unmarried daughter. If he does so, it will be assumed, unless proven otherwise, that the stated property was acquired for the benefit of the unmarried daughter or wife.

• Anyone who engages in a Benami transaction is penalized by imprisonment for a term of up to three years, or a fine, or both.

• If a person is holding any Benami property, they can’t re-transfer it. Any re-transfer made in this manner will be null and invalid. This rule, however, does not apply if the re-transfer is conducted in line with the Income Declaration Scheme, 2016 and section 190 of the Finance Act, 2016.

Let's look at the meaning of the Benami property to understand it better.

If a person purchases any property with a fake identity, that is known as a Benami property. The property can be movable, immovable, tangible or intangible. Benami property also includes a shared property with a brother, sister, or other relatives. Additionally, the monetary value of the property falls under this section.

While the 1988 Act merely stigmatized the transfer of title to a property, the 2016 Act deemed illegal both the transfer of title and ownership of Benami property.

Apart from this, the following is a list of the penalties that will be imposed on a person if he or she violates the law.

• A fine of up to 25% of the property's value may be imposed (fair market value). 

• Jail imprisonment between 1 to 7 years. 

• When a person submits false information under this Act, they are subject to a fine of up to 10% of the property's worth (fair market value) and an imprisonment of 6 months to 5 years.

Being connected to a transaction involving a Benami property is a criminal offence by itself, hence you should never partake in it. It is always better to follow the law and do things the right way. Failure to do so could invite serious legal consequences. One such way in which you can avoid these consequences by purchasing a property in your name through a home loan taken by you in your name. At Bajaj Markets, you can avail a housing loan at affordable interest rates.