What is Benami Property, and what is Benami Property Transactions Act?

When multiple loans and debts become too overwhelming and difficult to manage you can opt for debt consolidation. In this, you take one big loan and use it for repaying the multiple debts and loans. Thus, instead of having several debts you then have just one large debt to take care of.

What is a Benami Property?

A Benami property, as the name suggests, is a property without a name. In this kind of situation, a person who finances for the property buys it under someone else’s name or a bogus name. So, while the property may be registered under person A, the real owner is person B (who makes the investment). This hidden real owner is called a “Benamdar” and the property is called a “Benami property”.

What is Benami Property Transactions Act?

Under the Benami Act, a benamdar can face serious legal action if found guilty of buying a property under a fake name or someone else’s name.

The Benami Transactions (Prohibition) Act was first enacted in 1998. It had a provision of three-year jail term for the benamdars. However, it was modified on November 1, 2016, and is now renamed as Prohibition of Benami Property Transactions Act, 1988. As per the modified Act, the Benamdars can face jail imprisonment of seven years, which is more than twice the original term. Moreover, they may also have to pay a fine as much as 25% of the market value of the benami property.

The Benami Act was enacted to tackle the problem of tax evasion and black money. It was modified during the time of demonetization (November 2016) move to bolster the movement.

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