Section 5 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 5 is one sentence long, but it carries the main consequence of the Act for property: any property which is the subject matter of a benami transaction is liable to be confiscated by the Central Government. The steps by which that can happen are in other sections.
As per the consolidated text consulted, section 5 says any property which is the subject matter of a benami transaction is liable to be confiscated by the Central Government. The section says "liable", not "confiscated": it creates the exposure, and sections 24, 26 and 27 supply the notice, the adjudication and the confiscation order. The definition of benami property in section 2(8) also takes in the proceeds from the property.
How section 5 came in
Section 5 was substituted by the Benami Transactions (Prohibition) Amendment Act, 2016; its section 8 put in new sections 5 and 6 in place of the old ones. The wording here is checked against the Gazette of India copy of that amending Act (assent 10 August 2016) and is the same. Before 2016, section 5 spoke of acquisition of properties held benami by an authority in a prescribed manner, and a separate section 6 said the Act did not affect section 53 of the Transfer of Property Act, 1882 or any law on transfers for an illegal purpose. The 2016 changes were brought into force by notification; the date is not in the sources consulted. Those pre-2016 words are not the law under the consolidated text and should not be read into the present section.
If you are looking at a purchase and want to know whether the seller's title could be touched by this section, begin with a legal due diligence review of how the property was paid for and in whose name it stands.
The sentence of law
"Any property, which is subject matter of benami transaction, shall be liable to be confiscated by the Central Government."
Break it into three parts.
1. "Any property". Property is defined in section 2(26) as assets of any kind, movable or immovable, tangible or intangible, corporeal or incorporeal, with rights, title documents, converted forms and proceeds. Section 2(8) separately says benami property "also includes the proceeds from such property". So the section can reach more than land: the wide definition covers shares, deposits and other assets as well. For the definitions see our article on the other definitions in section 2.
2. "Subject matter of benami transaction". This sends you back to section 2(9), the four-limb definition and its exceptions. If the arrangement falls within an exception, it is not a benami transaction and the property is not its subject matter. Our article on the definition of a benami transaction sets out the limbs.
3. "Liable to be confiscated by the Central Government". The consequence is confiscation, and the party that confiscates is the Central Government. The text of section 5 does not say how, when or after what steps. "Liable" marks exposure; it is not itself the order.
Where the procedure lives
Section 5 does not contain any procedure. That is in the sections that follow, which are explained in separate articles:
| Stage | Section | What it does (in outline) | Our article |
|---|---|---|---|
| Notice and provisional attachment | Section 24 | Show-cause notice and provisional attachment | Section 24 |
| Adjudication | Section 26 | Adjudication of benami property | Section 26 |
| Confiscation and vesting | Section 27 | Confiscation order and vesting of the property | Section 27 |
Read in order, the sections say that property can be liable (section 5), a notice can be issued and the property can be provisionally attached (section 24), the matter is adjudicated (section 26), and a confiscation order can follow (section 27). The details of each step, including time limits and who may be heard, are in those sections and are not summarised further here.
How section 5 fits with sections 3, 4 and 6
The chapter containing section 5 is headed "Prohibition of Benami Transactions". The sections work as a set:
- Section 3 prohibits entering into a benami transaction; see our article on section 3.
- Section 4 stops the person claiming to be the real owner from suing to enforce a right, or defending on one; see section 4.
- Section 5 exposes the property itself to confiscation.
- Section 6 stops the benamidar from re-transferring the property to the beneficial owner or a person acting on his behalf, and treats such a re-transfer as null and void, with an exception tied to section 190 of the Finance Act, 2016 as printed.
Taken together, the Act reaches the person (section 3), the claim (section 4) and the property (section 5).
Who is affected
- The beneficial owner and the benamidar, because the property in the benamidar's name is the property exposed.
- Buyers and lenders dealing with such property, because a title that rests on a benami arrangement carries the exposure with it. A buyer should look at who paid and who benefits, not only whose name is on the deed.
- Family members holding property in each other's names, who should test each holding against section 2(9) and its exceptions.
Practical example
Deepak Joshi pays the full price for a warehouse in Ludhiana but has the sale deed made in the name of his employee, Salma Khan, intending to take the rent himself. If the arrangement is a benami transaction under section 2(9) and no exception applies, the warehouse is the "subject matter of benami transaction". Under section 5 it is liable to be confiscated by the Central Government. Nothing happens by the section alone; the later sections set out how the matter would be taken up. If Salma then sells the warehouse to a third party, section 6 and section 57 (see our article on sections 6 and 57) are the provisions to read next.
Other laws and later amendments
Section 5 names no other law. Where other sections refer to the Income-tax Act, 1961 or to procedure codes, check the current law for the corresponding provision. Later amendments to the Act are not in the sources consulted; check them.
Need help with property that may be exposed to confiscation?
Before you buy, lend against or inherit a property whose purchase history is unclear, it helps to know who paid for it and in whose name it stands. If you want that history reviewed against section 5, our legal due diligence service can go through the title papers and payment trail with you.
Key takeaways
- Section 5 makes any property that is the subject matter of a benami transaction liable to confiscation by the Central Government.
- "Liable" describes exposure; the procedure is in sections 24, 26 and 27.
- Benami property includes the proceeds from the property, and property is defined widely.
- The section turns on the definition of benami transaction in section 2(9), including its exceptions.
- Section 5 was substituted in 2016 and replaced the older wording on acquisition.
Read next
- Section 24: show-cause notice and provisional attachment
- Section 27: confiscation and vesting of benami property
- Section 4: no right to recover property held benami
- 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.