Benami Property
Property paid for by one person but held in another's name to hide the real owner — confiscable, with up to 7 years' imprisonment under the 1988/2016 Act.
Definition
A benami ('without name') property is one where the consideration is paid by one person but the property is held in the name of another, with the real payer enjoying the benefit — a structure classically used to hide black money or evade creditors and ceiling laws. Such transactions are prohibited by the Benami Transactions (Prohibition) Act, 1988, which was comprehensively overhauled by the Benami Transactions (Prohibition) Amendment Act, 2016 (in force from 1 November 2016) and renamed the Prohibition of Benami Property Transactions Act. The 2016 amendment expanded the definition, created adjudicating authorities and an appellate tribunal, and gave the government real enforcement machinery.
The law carves out exceptions that are not benami: property held by a karta for a Hindu Undivided Family, by a person in a fiduciary capacity (like a trustee), property held in the name of a spouse or child where the consideration comes from the buyer's known sources of income, and property held jointly with a brother, sister, or lineal ascendant/descendant paid for from known sources. So buying a flat in your wife's or child's name with your declared income is legal; parking unaccounted cash in your driver's name is not.
The consequences under the amended Act are severe: benami property can be confiscated by the central government without compensation, and entering into a benami transaction is punishable with rigorous imprisonment of one to seven years plus a fine of up to 25% of the property's fair market value. The benamidar (name-lender) is also barred from re-transferring the property to the beneficial owner.
One important legal question remains unsettled as of mid-2026: retrospectivity. In Union of India v. Ganpati Dealcom (August 2022), the Supreme Court held the 2016 amendment's punitive provisions could apply only prospectively — i.e., not to transactions before 1 November 2016 — and struck down provisions of the unamended 1988 Act. But in October 2024 the Supreme Court recalled that judgment on review, holding that the constitutionality of the old provisions had been decided without being properly challenged, and sent the issue for fresh adjudication. Until a new ruling, the treatment of pre-2016 benami transactions remains in flux.
Example
The Income Tax Department attached a Delhi bungalow as benami property after finding it was registered in a household employee's name while the entire purchase price came from his employer's undisclosed cash.
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Sources
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