Benami Transactions (Prohibition) Amendment Act, 2016

1. What is Benami Property?

As per section 4 (8) of the Benami Transaction (Prohibition)Amendment Act, 2016 (‘PBT Act’) means any property which is the subject matter of a benami transaction and also includes the proceeds from such property.

2. Who is a Benamidar and Beneficial Owner?

As per section 4 (10) of the PBT Act, “benamidar” means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name.

As per section 4(12) of the PBT Act, “beneficial owner” means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar.

3. What is a Benami transaction?

“benami transaction” means,—

1. a transaction or an arrangement—
   1. where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and
   2. the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, except when the property is held by—
      1. a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;
      2. a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, 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;
      3. any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual;
      4. any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or
2. a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or
3. a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;
4. a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;

   Explanation.—For the removal of doubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882, if, under any law for the time being in force,—

   1. consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of such property;
   2. stamp duty on such transaction or arrangement has been paid; and
   3. the contract has been registered.

4. Punishment for Benami transaction

• Confiscation of benami property
• Where a benami transaction has been entered into to defeat the provisions of any law, avoid payment of statutory dues or avoid payment to creditors, any person who enters or abets/induces another person to enter into such a transaction would be punishable with:
  1. Imprisonment between 1 to 7 years and
  2. Fine up to 25% of the fair market value of the property
  3. Where a person who is required to provide information under this Act provides false information, he shall be punishable with:
  4. Imprisonment between 6 months to 5 years and
  5. Fine up to 10% of the fair market value of the property