What is Benami Transactions in India?

Yet other transactions of this nature originated in fraud or were entered into with fraudulent motives. Thus, for instance, if X was heavily indebted, he would purchase property in the name of Y, so that his creditors would not be able to attach such property. X could also do so to evade payment of tax.

Thus, in all cases where A advances the purchase price of property, which is registered in B’s name, it being plainly understood between A and  that, in fact, though not in law, the property is to belong to A, it would be a case of a benami transaction, and  would be called a benamidar.

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It may be noted that benami transactions are not confined to purchases only. Thus, a person may take a lease of immovable property in the name of another. Or, he may create a mortgage of his property for a fictitious consideration. Such transactions would also be benami.

The law on benami transactions in India was drastically changed by the Benami Transactions (Prohibition) Act, 1988.