Sections 173-176 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.
A will may promise a person a fixed sum every year or every month, instead of a lump sum. Chapter XX of Part VI, "Of Bequests of Annuities", sets four rules for that: how long an annuity lasts, when it vests, how it is cut back if the estate is short, and where it stands in relation to the residue.
As per the text of the Act consulted: an annuity created by a will is received by the legatee for his life only, unless a contrary intention appears by the will, even if it is directed to be paid out of the property generally or a sum is bequeathed to be invested in buying it (s.173). If the will directs an annuity to be provided out of property, or money to be invested to buy one, the legacy vests in interest on the testator's death and the legatee may choose between having an annuity bought or taking the money set aside (s.174). If the assets are short, the annuity abates in the same proportion as other pecuniary legacies (s.175). Where there is both an annuity and a residuary gift, the whole annuity is satisfied before any residue is paid, even if the capital must be used (s.176).
Section 173: an annuity is for life unless the will says otherwise
Section 173 reads, in substance: where an annuity is created by will, the legatee is entitled to receive it for his life only, unless a contrary intention appears by the will, notwithstanding that the annuity is directed to be paid out of the property generally, or that a sum of money is bequeathed to be invested in the purchase of it.
So the default is life. The two "notwithstanding" phrases close off arguments that a direction to pay out of the whole estate, or a gift of a sum to buy the annuity, makes the entitlement longer than life.
The Act's illustrations:
- A bequeaths to B 500 rupees a year. B is entitled during his life to receive the annual sum of 500 rupees.
- A bequeaths to B 500 rupees monthly. B is entitled during his life to receive 500 rupees every month.
- A bequeaths an annuity of 500 rupees to B for life, and on B's death to C. B is entitled to an annuity of 500 rupees during his life. C, if he survives B, is entitled to an annuity of 500 rupees from B's death until his own death.
In the third illustration the annuity is passed on to a second life, and C's annuity runs for C's life, not longer. If you have a will that provides for an annuity and need to know how long it runs, a legal consultation helps to read the words against section 173.
Section 174: the annuity bought out of the estate
Section 174 applies where the will directs that an annuity be provided for any person out of the proceeds of property, or out of property generally, or where money is bequeathed to be invested in the purchase of an annuity for any person. On the testator's death, the legacy vests in interest in the legatee, and he is entitled at his option to have an annuity purchased for him or to receive the money appropriated for that purpose by the will.
The Act's illustrations:
- A by his will directs that his executors shall, out of his property, purchase an annuity of 1,000 rupees for B. B is entitled at his option to have an annuity of 1,000 rupees for his life purchased for him or to receive such a sum as will be sufficient for the purchase of such an annuity.
- A bequeaths a fund to B for his life, and directs that after B's death it shall be laid out in the purchase of an annuity for C. B and C survive the testator. C dies in B's lifetime. On B's death the fund belongs to the representative of C.
Two points stand out. First, the legatee has an option: the annuity or its purchase price. Second, because the legacy vests in interest on the testator's death, if the legatee dies before it is carried out his representative takes, as illustration (ii) shows. See our article on section 119 for the meaning of "vested in interest".
Section 175: abatement of an annuity
Section 175 provides that where an annuity is bequeathed but the assets of the testator are not sufficient to pay all the legacies given by the will, the annuity shall abate in the same proportion as the other pecuniary legacies given by the will. No illustration is printed.
To abate is to be reduced. If the estate cannot pay every money legacy in full, each is cut by the same proportion, and the annuity is cut with them. For payment of annuities in the course of administration see our article on payment of annuities and investment to provide for legacies and for interest on annuities our article on interest on legacies and annuities.
Section 176: the annuity ranks before the residue
Section 176 provides that where there is a gift of an annuity and a residuary gift, the whole of the annuity is to be satisfied before any part of the residue is paid to the residuary legatee, and, if necessary, the capital of the testator's estate shall be applied for that purpose. No illustration is printed.
In plain terms, the residuary legatee takes only what is left after the annuity has been fully provided for, and the executor may have to draw on capital to do it. Our article on the residuary legatee under sections 102 and 103 explains who takes the residue.
The four sections together
| Section | Question answered | Answer |
|---|---|---|
| 173 | How long does an annuity last? | The legatee's life only, unless a contrary intention appears |
| 174 | When does a bought annuity vest? | In interest at the testator's death; the legatee may choose the annuity or the money |
| 175 | What if the estate is short? | The annuity abates in the same proportion as other pecuniary legacies |
| 176 | Where does the annuity stand against the residue? | The whole annuity is satisfied first, using capital if necessary |
Examples with invented names
Section 173. Wasim's will gives his old servant "3,000 rupees a month". The words create an annuity. Unless the will shows a contrary intention, the servant receives it for his life only.
Section 174. Xena's will directs her executors to purchase an annuity of 60,000 rupees a year for her sister. At Xena's death the legacy vests in interest in the sister. She may choose to have the annuity purchased or to take the money set aside to buy it.
Section 175. The estate cannot pay all the money legacies in full. Each is reduced by the same proportion, including the annuity.
Section 176. The will gives an annuity to the testator's daughter and the residue to his son. The whole annuity is provided for before any residue goes to the son.
Where the sections apply
Schedule III lists sections 173 to 176 among the sections of Part VI that section 57 applies to the wills and codicils of Hindus, Buddhists, Sikhs and Jainas described there. Section 58 as printed says Part VI does not apply to the testamentary succession to the property of any Muhammadan. See our article on wills of Hindus, Buddhists, Sikhs and Jainas and Schedule III. The print consulted shows amendments only up to the Indian Succession (Amendment) Act, 2002 (26 of 2002); check for later amendments.
Need help with an annuity clause?
An annuity in a will raises questions of duration, funding and priority. You can start with a legal consultation to read the clause against sections 173 to 176.
Key takeaways
- An annuity under a will is for the legatee's life unless the will shows a contrary intention (s.173).
- A direction to buy an annuity vests the legacy in interest at death, and the legatee may take the money instead (s.174).
- An annuity abates in the same proportion as other pecuniary legacies (s.175).
- The whole annuity is satisfied before any residue is paid, using capital if needed (s.176).
Read next
- Sections 171 and 172: bequest in general terms and bequest of interest of a fund
- Sections 177 to 179: legacies to creditors and portioners
- Sections 338 to 344: payment of annuities and investment to provide for legacies
- Sections 351 to 355: interest on legacies and annuities
Disclaimer: Based on an unofficial print of the Indian Succession Act, 1925 showing amendments up to the Indian Succession (Amendment) Act, 2002 (26 of 2002), as consulted on 2 October 2026. It explains the words of the statute only; later amendments, State amendments and rules, court fees and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.