The Benami Transactions (Prohibition) Act, 1988, prohibits transactions where a property is held by one person but paid for by another. It aims to curb black money in real estate.

What is a Benami Property?

• A property purchased in the name of another person (without intent of genuine ownership), while the payment is made by someone else.

Exceptions (Not Benami):

• Property held in the name of spouse or children where payment is from known sources.

• Held in fiduciary capacity (e.g., trustee, partner, director).

Consequences of Holding Benami Property:

1. Confiscation of Property:

   • Government can seize the property without compensation.

2. Penalties and Prosecution:

   • Fine up to 25% of fair market value

   • Imprisonment up to 7 years

3. Loss of Legal Title:

   • You cannot claim ownership in any legal forum.

Precaution:
Always ensure full transparency in ownership documents and funding sources to avoid legal action.