Definition
The law that prohibits benami transactions, in which property is held in one person's name but paid for or controlled by another, first enacted in 1988 and overhauled in 2016 with confiscation of benami property, adjudication machinery and stricter penalties.
Background and evolution
"Benami" literally means "without a name". In a benami transaction, a person buys property in the name of another (the benamidar), while the real owner provides the money and enjoys the benefit. Benami holdings have long been used to evade taxes, hide black money, avoid land ceiling laws and shield assets from creditors.
The Law Commission recommended action, and the Benami Transactions (Prohibition) Act was passed in 1988, prohibiting such transactions and barring the real owner from recovering the property. But the government never framed rules to make its confiscation provisions work, so the law remained largely unused.
In 2016, Parliament passed a major amendment, renaming the law the Prohibition of Benami Property Transactions Act. It created a full system of investigation, attachment, adjudication and confiscation, and it came into force on 1 November 2016, a week before demonetisation, as part of a broader push against black money.
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