Kailash Nath, also known as Bhoothnath (Amitabh Bachchan), enters the Bhoothworld, where he is mocked and questioned about his abilities as a ghost as he was unsuccessful to scare any child. To redeem himself, he returns to India where he tries his best to scare children but is unsuccessful with his attempts as children have become strong physically and mentally and verbally. However, a boy named Akhrot (Parth Bhalerao) can see him in his true form. Akhrot is not scared of Bhoothnath but helps him scare a few children; in return, he asks Bhoothnath to act scared of him and to run away from a haunted house while he chants mantras in front of the children, so that they can accept him in their cricket team.
Bhoothnath decides to help Akhrot further by helping him earn money by giving ghosts living in under-construction high rises peace by fulfilling the wishes they were still staying back on Earth as ghosts for; in the process, they come to know why the ghosts died and help their families get insurance money by scaring corrupt insurance officers, further learning in this process about Bhau (Boman Irani), a former criminal who is now a corrupt politician. Seeing the amount of corruption in India, and encouraged by Akhrot, Bhoothnath decides to contest the upcoming elections. Soon, the rivalry between Bhoothnath and Bhau heats up, to the extent that Bhoothnath sacrifices his powers to win. One day before the elections, a rally is to be held by Bhoothnath to encourage a high turnout on election day. Bhau’s men threaten to kill Akhrot unless he prevents the rally from happening, but Akhrot refuses and is ready to face the consequences.