The literal translation of the Hindi word ‘benami’ is without a name. However, a benami property is not a property without a legal owner. Instead, it is a property bought by a person, not under his or her name. It is rather held in the name of spouse or child or just anyone for which the amount is paid out of known sources of income. In India, there have been several cases where corrupt officials or ministers were found with benami property held in the name of their servants as well.

The transaction involved in the purchase of a benami property is called a benami transaction. Through benami transactions, people buy different kinds of assets, including movable, immovable, tangible, intangible, any right or interest, or legal documents. The person in whose name the property is bought is called ‘benamdar’.

As in most cases, people buy a benami property to use their black money or evade taxation, or both. In some cases, it gets hard for the investigation agencies to find out about the real owner (or the purchaser) of the benami property due to fake names and identities.

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Law in India against benami property

Prime Minister Narendra Modi won a landslide victory in the 2014 general election by making several promises, including cracking down on black money. After assuming office, his government enacted the Benami Transactions (Prohibition) Amendment Act of 2016. The law allows for a person involved in crimes relating to benami property to be sent for rigorous imprisonment of up to seven years. In such cases, a fine may also be imposed upon the accused.

According to the 2016 law, this fine may extend to 25 percent of the fair market value of the benami property. Further, the law empowers the government to confiscate deposits of people using accounts of other people to convert their unaccounted wealth into white money.

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Before this, India had passed the Prohibition of Benami Property Transactions Act of 1988 to act against benami properties and their owners.

(Edited by : Sudarsanan Mani)