In plain words: parents often buy a plot or flat in a child's name — for the future, out of love. Mostly it is fine. But the Benami Act draws a line worth knowing.
The child exception
Like the spouse exception, the Act excludes property purchased by an individual in the name of their child, so long as it is bought from the individual's known sources of income. A parent buying in a son's or daughter's name from disclosed income is generally not a benami transaction.
Again, it is about the source
The exception protects genuine, income-funded purchases. Where the money is unaccounted cash routed through a child's name to hide it, the protection can be lost — because then the child's name is just a cover.
Adult vs minor children
- For a minor, a parent/guardian naturally manages the property — the genuine, income-funded purchase sits within the exception.
- For an adult child, the same known-source test applies; keep the funding and intent clean.
Common safe scenarios
- A plot bought for a child from declared savings.
- An investment flat in a child's name funded by cheque/transfer from taxed income.
How to protect the purchase
- Fund it from disclosed income through banking channels.
- Retain source-of-funds proof.
- Avoid using a child's name to park unexplained cash.
Frequently asked questions
Can I buy a house in my child's name? Yes — from your known, disclosed income it is an express exception, not benami.
Does it matter if the child is a minor? The known-source test is the key either way.
When does it become benami? When unaccounted cash is routed through the child's name to conceal it.
How Vakil Help Desk helps
Vakil Help Desk advises on Benami Act notices, provisional attachment and confiscation, and defends clients before the Initiating Officer, the Adjudicating Authority and the Appellate Tribunal — often alongside linked PMLA and income-tax matters. If you have received a benami notice or are worried about a property holding, we can help.
This article is for general legal awareness, not individual legal advice. The Benami law and the case law around it (including on how far the 2016 amendments apply) continue to evolve, and the right answer depends on your facts and the current legal position. Please consult a lawyer before acting on a benami notice or transaction.