The Benami Property Transaction Act, 1988 is an Act in the prohibition of benami (made, done, held or transacted in the name of another person that’s considered fictitious) transactions and the right to recover property held benami and for matters associated with it or incidental to that person.
The law pertaining to benami transactions were first enacted through the Benami Transactions (Prohibitions) Act, 1988, and it included eight sections. However, the Act was later amended by the Benami Transactions (Prohibitions) Amendment Act, 2016, which included a total of 72 sections.
Benami means ‘no name’ in Hindi. A property purchased by an individual, not under their name is known as benami property. The benami transactions include purchasing movable/immovable/tangible/intangible, any interest or right, or legal documents.
A benami transaction is considered when a property is held or transferred by one individual and the consideration of the said property is paid by another individual. Also, there are several other transactions which fall under benami transactions:
Punishment under the Benami Act are as below:
Under section 2(26) of The Prohibition of Benami Property Transaction Act, 1988 property is referred to an asset (movable or immovable, corporeal or incorporeal, tangible or intangible) which also includes interest or rights of the legal instruments or documents confirming the interest or the title of the property.
When the proceeds from the purchase of the property are paid by an individual, but the property ownership title is held in the name of another person, and the said property is kept for future or immediate benefit, of the person who paid towards the proceeds of the property, is known as a benami transaction.
Prior to The Benami Transactions (Prohibitions) Amendment Act, 2016, the penalty was maximum imprisonment of 3 years and fine. However, after the amendment, it has been revised to the imprisonment of a minimum of one year and a maximum of seven years along with a fine of 25% of the fair market value of the property. Also, if an individual provides false details to any officer under the amendment Act, the individual is liable for minimum 6 months to a maximum of 5 years of imprisonment and penalty of 10% of the fair market value of the property. The government can also confiscate the said property considered as a benami property.
Under the Benami Transactions (Prohibitions) Amendment Act, 2016, it’s considered a benami transaction if a person holds property in the name of any partnership firm or company.
It shall be considered void and null if a re-transfer of a benami property by the benamidar.
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