What is benami property?

A benami property meaning is a property that is held by one person (the "benamidar") but paid for by another person (the "beneficial owner"). The term "benami" translates to "without name" or "no name," indicating that the property is held in the name of someone who is not the actual owner. This practice is often used to conceal the true ownership of the property, evade taxes, or launder money.

What Does a Benami Property Means?

The Benami Transactions (Prohibition) Act, 1988 was enacted to prohibit benami transactions and provide for the confiscation of benami properties.

1. Amendment Act, 2016: Strengthened the original law, introducing stricter penalties and a detailed adjudication process.

2. Penalties: Violators can face up to 7 years of imprisonment, confiscation of the benami property, and fines amounting to 25% of the property's fair market value.

3. Exceptions: Some transactions are exempt from the scope of the law, such as property held in the name of a spouse or child where the property is purchased using known sources of income.

This is all about what is a benami property. I hope this helps!

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Benami is a word originated from Hindi language which means ‘without a name’. Here I have given a deeper explanation of

benami property and its meaning. 

Benami property means a property without a name. Any property which has monetary value like real estate property, cash deposits, Jewellery can come under benami property. 

Benami property has a close relation with benami transactions. It is known as the property purchased in the name of a person who has not paid for it or we can say the person who has purchased the property kept his/her name hidden.

Arun has purchased an apartment with his own money and he does not want to show on papers that he has purchased the property. So he registered the property in his sister’s name (Anjali). And later he is using that property. This is known as benami transaction because the payment is made by Arun for property purchase but the owner of that property is Anjali. So we can say that Arun is holding a benami property.

There are majorly three reasons for benami transactions:

1. The major reason for benami transactions is to escape from tax. A person who has a large amount of untaxed money (black money) and wants to convent that money into another form of asset without income tax scrutiny.

2. The other reason can be when a person has a large amount of debts in that case he may buy the property on someone else's name to increase his assets and avoid liability.

3.  If a person has received a huge amount of any kind of  bribe than to manage that money a person might prefer to do a benami transaction.

As benami transactions are illegal in the country and if someone is found guilty in the eyes of court for holding a benami property, he/she can face serious consequences. Here is the list of consequences if an individual is found guilty of benami transactions. 

• imprisonment between 1 to 7 years.

• Fine up to 25% of the fair market value of the property

• Imprisonment between 6 months to 5 years 

• Fine up to 10% of the fair market value of the property

This is all about what is benami property, reasons for benami transactions and punishments of benami transactions.