Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 2 of the Act is a list of 31 definitions. Clauses (8), (9), (10) and (12) define benami property, benami transaction, benamidar and beneficial owner and are covered in our article on benami transaction, benamidar and beneficial owner. This article covers all the other clauses: the officers and bodies, fair market value, person, property, transfer and the terms borrowed from other laws.
As per the consolidated text consulted, section 2 names the Adjudicating Authority, Appellate Tribunal, Administrator, Approving Authority and Initiating Officer, and ties the last three to ranks defined in the Income-tax Act, 1961. "Property" is defined widely to include assets of any kind, rights, title documents, converted forms and proceeds. "Fair market value" is the open-market price on the date of the transaction, or a price worked out in the prescribed manner where that price cannot be found.
How section 2 came in
Section 2 was substituted by the Benami Transactions (Prohibition) Amendment Act, 2016 and is checked here against the Gazette of India copy of that Act. The words of the clauses below match the gazette. The 2016 changes were brought into force by notification; the date is not in the sources consulted. Before 2016, the old section 2 defined only three terms, namely benami transaction, prescribed and property, in a few lines.
If you are checking who can act against a property or what counts as "property" for a transaction, a legal due diligence review of the title and the transaction history helps you match the facts to these definitions.
The authorities and officers: clauses (1) to (4), (6), (19), (20)
| Clause | Term | What the text says |
|---|---|---|
| (1) | Adjudicating Authority | The Adjudicating Authority appointed under section 7 |
| (2) | Administrator | An Income-tax Officer as defined in clause (25) of section 2 of the Income-tax Act, 1961 |
| (3) | Appellate Tribunal | The Appellate Tribunal established under section 30 |
| (4) | Approving Authority | An Additional Commissioner or a Joint Commissioner as defined in clauses (1C) and (28C) respectively of section 2 of the Income-tax Act, 1961 |
| (6) | authority | An authority referred to in sub-section (1) of section 18 |
| (19) | Initiating Officer | An Assistant Commissioner or a Deputy Commissioner as defined in clauses (9A) and (19A) respectively of section 2 of the Income-tax Act, 1961 |
| (20) | Member | The Chairperson or the Member of the Adjudicating Authority or the Appellate Tribunal, as the case may be |
These clauses give the chain of command that later sections use. The Initiating Officer starts action, the Approving Authority gives approval, the Administrator has a role later in the Act, the Adjudicating Authority decides and the Appellate Tribunal hears appeals. How each works is in later sections; see our articles on the Adjudicating Authority and on the Initiating Officer and Approving Authority. The references to the Income-tax Act, 1961 are quoted as printed; check the current income-tax law for the corresponding provisions.
Clause (11) adds that "Bench" means a Bench of the Adjudicating Authority or the Appellate Tribunal, as the case may be.
Fair market value: clause (16)
"Fair market value", in relation to a property, means:
- the price that the property would ordinarily fetch on sale in the open market on the date of the transaction; and
- where that price is not ascertainable, such price as may be determined in accordance with such manner as may be prescribed.
Two points follow. The date is the date of the transaction, not the date of a notice. And the fallback method is left to rules; the text consulted does not give the method, and the rules are not in the sources. Fair market value is also the base for the fine in section 53, which is covered in our article on the penalty for a benami transaction.
Property, person and transfer: clauses (24), (26), (29)
Person (clause 24) "shall include" six groups: an individual; a Hindu undivided family; a company; a firm; an association of persons or a body of individuals, whether incorporated or not; and every artificial juridical person not falling under the first five. The word "include" shows the list is not narrow.
Property (clause 26) means "assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal" and includes:
- any right or interest;
- legal documents or instruments evidencing title to or interest in the property;
- where the property can be converted into some other form, the property in the converted form; and
- the proceeds from the property.
So a flat, shares, a bank balance, a debenture or the sale money from any of them can each be "property".
Transfer (clause 29) "includes sale, purchase or any other form of transfer of right, title, possession or lien". It reaches beyond a registered sale to any transfer of a right or of possession.
Firms, partners and partnerships: clauses (17), (22), (23)
"Firm" has the meaning in section 4 of the Indian Partnership Act, 1932 and "shall include a limited liability partnership as defined in the Limited Liability Partnership Act, 2008". "Partner" takes its meaning from the same section of the 1932 Act and includes a minor admitted to the benefits of partnership and a partner of a limited liability partnership formed and registered under the 2008 Act. "Partnership" likewise includes a limited liability partnership. A property held by a partner or a firm may therefore fall under the Act in the same way as property held by an individual.
Court and other terms
- Special Court (clause 28): a Court of Session designated as Special Court under sub-section (1) of section 50.
- High Court (clause 18): the High Court within whose jurisdiction the aggrieved party ordinarily resides, carries on business or personally works for gain; where the Government is the aggrieved party, the High Court in whose jurisdiction the respondent (or any of several respondents) ordinarily resides, carries on business or personally works for gain.
- Attachment (clause 5): "the prohibition of transfer, conversion, disposition or movement of property, by an order issued under this Act".
- Banking company (clause 7): a company to which the Banking Regulation Act, 1949 applies, including any bank or banking institution referred to in section 51 of that Act.
- Board (clause 13): the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963.
- Notification (clause 21): a notification published in the Official Gazette; "notified" follows.
- Prescribed (clause 25): prescribed by rules made under the Act.
- Trustee (clause 30): the trustee as defined in section 3 of the Indian Trusts Act, 1882.
Terms borrowed from other laws: clauses (14), (15), (27), (31)
Director has the meaning in clause (34) of section 2 of the Companies Act, 2013. Executor has the meaning in clause (c) of section 2 of the Indian Succession Act, 1925. Public financial institution has the meaning in clause (72) of section 2 of the Companies Act, 2013. Clause (31) is a catch-all: words not defined in this Act but defined in the Indian Trusts Act, 1882, the Indian Succession Act, 1925, the Indian Partnership Act, 1932, the Income-tax Act, 1961, the Depositories Act, 1996, the Prevention of Money-Laundering Act, 2002, the Limited Liability Partnership Act, 2008 or the Companies Act, 2013 have the same meanings in this Act as in those Acts. For the money-laundering side of that borrowing, see our introduction to the Prevention of Money-laundering Act, 2002. Check the current text of each named law before relying on a borrowed meaning.
Example
Sunita Rao, a partner in a Surat firm, learns that a notice names an "Initiating Officer". Clause (19) tells her that this is an Assistant Commissioner or a Deputy Commissioner as defined in the Income-tax Act, 1961, which she can check against the officer's designation. If the notice concerns a plot bought years ago, clause (16) tells her the fair market value is the open-market price on the date of the transaction, and she can start collecting evidence for that date.
Later amendments to the Act are not in the sources consulted; check them before acting.
Need help with the definitions in your case?
A defined term can decide whether an officer is competent, whether an asset is covered, or what value a fine is based on. If you need the definitions applied to a specific property or notice, write to us for a legal due diligence review of the papers.
Key takeaways
- Section 2 has 31 clauses; this article covers all except (8), (9), (10) and (12).
- Administrator, Approving Authority and Initiating Officer are ranks defined by reference to the Income-tax Act, 1961.
- Property is defined widely and includes proceeds and converted forms.
- Fair market value is the open-market price on the date of the transaction, with a prescribed fallback.
- Clause (31) borrows meanings from eight other Acts for undefined words.
Read next
- Section 2: benami transaction, benamidar and beneficial owner defined
- Section 3: prohibition of benami transactions
- Sections 7 to 11: the Adjudicating Authority
- Overview of the Benami Transactions Prohibition Act
Disclaimer: Based on a third-party consolidated text of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, checked against the Gazette of India copy of that amending Act (11 August 2016), as consulted on 2 October 2026. The commencement notification, the rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.