Benami is derieved from Hindi word that literally translates to nameless, but in this context, it means holding property in someone else’s name or even a fictitious name to hide the real identity of the beneficial owner to evade the tax and hide from Tax agencies.
Benami property refers to any property that is the subject of a Benami transaction which is done on some others name to hide the property or transactions to evade the tax and hide wealth from government agencies.
Section 2(8) of the Prohibition of Benami Property Transactions Act, 1988, defines this as so (PBPT Act).
For the past few years, the government has worked vigorously to stake out all the illegal black money. Through various schemes like the black money act, demonetization, disclosure scheme, etc., in a similar effort, with the Benami Act, the government is putting efforts to make reforms In the illegal real estate holdings sector.
PBPT Act defines Benami Transactions as “a transaction or an arrangement in which a property is transferred to or held by a person, and the consideration for such property has been provided or paid by another person; and the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration.” A Benami transaction is one in which a transaction or arrangement involving property is carried out or made under a fictitious name, or where the owner of the property is unaware of or denies knowledge of such ownership, or where the person providing the consideration is not traceable or is fictitious.
A “Benamidar” is a person or fake person whose name the Benami property is transferred or kept, including a person who lends his name.
There are few exceptions to the concept of Benami property.
The concept of Hindu undivided family, in which property is held by a Karta (elderly person who takes responsibility/decisions of/for the family) or a member of a Hindu undivided family for his benefit or the benefit of other members of the family, and the consideration for such property has been provided or paid out of known sources, is not included in the concept of Benami property. Similarly, the following individuals/entities are not included in the definition of Benami property/transaction
- a trustee, executor, partner, director of a firm, a depository or a participant as an agent of a depository under the Depositories Act, 1996, and any other person as may be notified by the Central Government for this purpose;
- an individual in the name of his spouse or any child of such individual, and the consideration for such property has been provided or paid out of the individual’s known sources;
- any person in the name of his brother or sister or lineal ascendant or descendant, where the names of the individual and the brother or sister or lineal ascendant or descendant appear as joint owners in any document, and the consideration for such property has been provided or paid out of the individual’s known sources;
- any transaction involving the granting of possession of any property in part fulfilment of a contract referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), if, under any law currently in force,-
I, the person to whom the possession of the property has been granted has provided consideration for such property, but the person who has granted possession of such property retains ownership of such property;
(ii) the transaction or agreement has been subject to stamp duty; and
The contract has been registered (iii).
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