India: The Benami Transactions (Prohibition) (Amendment) Bill, 2015

Last Updated: 28 October 2015
Article by Michelle Solomon Le Page

Benami transactions

India has grappled with black money problems for decades, and no sector has been more implicated than the real estate sector. The word "benami" means anonymous or nameless, and in India the term "benami transaction" is used to describe a transaction where one person pays for property but the property is transferred to/held by somebody else. The person who pays for the property is the real beneficiary (either at present or at some point in the future) but is not recorded as the legal owner of the property. This enables the payer/beneficiary to achieve undesirable purposes such as utilizing black money, evading the payment of tax and avoiding making payments to creditors.

The Act

The Benami Transactions Act, 1988 (the "Act") was enacted in 1988 to prohibit all benami transactions. The Act defined a "benami transaction" as "any transaction in which property is transferred to one person for a consideration paid or provided by another person". It stated that a person entering into a benami transaction was punishable with imprisonment up to 3 years or with a fine or with both. It did not allow any person to assert a claim over property held in a benami manner, except in the case of a hindu undivided family or in the case of property held on trust. It also stated that properties held benami could be acquired free of cost by "authority" (which was to be prescribed by Rules of the Central Government).

However, the Act was not comprehensive enough and lacked the teeth to make a big impact - Rules for the Act were not framed and benami transactions continued in India.

The Bill

The Benami Transactions (Prohibition) Amendment Bill, 2015 (the "Bill") seeks to amend the Act and give it the push required to enable it to put an end to benami transactions and allow the government to recover benami property.

The Bill seeks to: (i) amend the definition of benami transactions, (ii) establish adjudicating authorities and an Appellate Tribunal, and (iii) specify revised penalties for benami transactions.

Definitions amended

The Bill increases the scope of transactions which qualify as benami and includes property transactions where: (i) the transaction is made in a fictitious name, (ii) the owner is not aware of or denies knowledge of the ownership of the property, or (iii) the person providing the consideration for the property is not traceable or is fictitious.

The Bill specifies the following cases which will not fall within the scope of the definition of a benami transaction. When a property is held by: (i) a member of a Hindu undivided family, and is being held for his or another family member's benefit, and has been provided for or paid from known sources of income of that family; (ii) a person in a fiduciary capacity (such as a trustee, executor, partner, director of a company, depository or participant); (iii) a person in the name of his spouse or child, and the property has been paid from the person's known sources of income; and (iv) a person in the name of his brother or sister or lineal ascendant or descendant (where their respective names appear as joint-owners in any document), and the property has been paid from the person's known sources of income.

The Bill also adds to the definition of the word "property". It was defined in the Act as "property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property". The Bill adds that property includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form, and also includes the proceeds from the property.

Adjudicating authorities and an Appellate Tribunal established

The Bill establishes four authorities who will be able to conduct inquiries regarding benami transactions: (i) the Initiating Officer, (ii) the Approving Authority, (iii) the Administrator and (iv) the Adjudicating Authority.

If an Initiating Officer believes that a person is a benamidar (the person in whose name the benami property is held or transferred), he may issue a notice to that person to show cause why that property should not be considered benami.

The property may be attached for 90 days from the date of issue of the notice. The Investigating Officer will make enquiries, collect evidence and then pass an order (within 90  days from the date of issue of the notice) attaching, continuing to attach, revoking the attachment or deciding not to attach the property (in all cases with prior approval of the Approving Authority).

If an order is passed to continue holding the property, the Initiating Officer will refer the case to the Adjudicating Authority.  The Adjudicating Authority will issue notices, call for and consider evidence and, after providing an opportunity to be heard to the relevant people, pass an order on whether or not to hold the property as benami.

If an order is made to hold the property as benami, a confiscation order shall be made, all rights and title in such property shall vest absolutely in the Central Government free of all encumbrances and the Administrator shall receive and manage the property.

The Bill also establishes an Appellate Tribunal to hear appeals against orders passed by the Adjudicating Authority. 

Appeals against orders of the Appellate Tribunal will be to the respective High Court with jurisdiction.

Revised penalties

Under the Act, the penalty for entering into benami transactions is imprisonment up to 3 years or a fine or both.  The Bill increases this penalty to rigorous imprisonment from 1 to 7 years and a fine which may extend to 25% of the fair market value of the benami property.

The Bill also provides a penalty (of rigorous imprisonment from 6 months to 5 years and a fine which may extend to 10% of the fair market value of the benami property) for providing false information in a proceeding under the Act.

The passing of this bill by Parliament will go a long way in improving the image of the Indian real estate sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.