Section 24 of the Income-tax Act, 2025 provides that where a property is co-owned with definite and ascertainable shares, the co-owners are not assessed as an association of persons. Each computes income on their share, and each is individually entitled to the section 21(6) relief.
What section 24 does
Joint ownership is the norm for Indian residential property, often for reasons that have nothing to do with tax — bank requirements, succession planning, stamp duty. Section 24 makes sure that joint ownership does not create a separate taxable entity.
The condition is that the shares must be definite and ascertainable. Where they are, the co-owners are not assessed as an association of persons, and each co-owner's share of the income is computed separately and included in their own total income.
Sub-section (2) then does something valuable: the section 21(6) relief — nil annual value for a self-occupied house — is available as if each co-owner is individually entitled to it.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 26 | Co-owners with definite shares assessed separately, not as an AOP | 24(1) |
| 26, proviso | Self-occupied relief available to each co-owner | 24(2) |
| 23(2) and (4) | Nil annual value for self-occupied property | 21(6) and 21(7) |
| 24(b), proviso | Interest cap for self-occupied property | 22(2) |
Section 24 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — no association of persons
For property co-owned with definite and ascertainable shares, the co-owners shall not be assessed as an association of persons. Their income is computed separately under this Part according to their respective shares and included in their individual total income. The definiteness of the share is the gateway condition — where shares are indeterminate, the protection does not apply.
Sub-section (2) — the relief applies co-owner by co-owner
The relief available under section 21(6) is provided as if each co-owner is individually entitled to it. Each co-owner therefore looks to their own position — including their own two-house limit under section 21(7) — rather than sharing a single relief across the group.
Worked example
A husband and wife jointly own two properties in equal shares in tax year 2026-27, and both are taxed under the new regime.
| Property | Facts | Treatment |
|---|---|---|
| Flat 1 — self-occupied | Joint loan; interest payable ₹3,60,000 for the year | Annual value nil for each co-owner under section 21(6); each claims interest on their share |
| Flat 2 — let out | Annual value ₹5,00,000 after municipal taxes; interest payable ₹2,00,000 | Each computes 50% of the income |
| Each co-owner's computation | Working | Amount |
|---|---|---|
| Flat 1 — interest on 50% share | 50% of ₹3,60,000 = ₹1,80,000, within the ₹2,00,000 cap in section 22(2) | (₹1,80,000) |
| Flat 2 — share of annual value | 50% of ₹5,00,000 | ₹2,50,000 |
| Flat 2 — 30% deduction | Section 22(1)(a) | (₹75,000) |
| Flat 2 — share of interest | 50% of ₹2,00,000; no cap for a let-out property | (₹1,00,000) |
| Net house property income per co-owner | (₹1,05,000) |
Because each co-owner is treated individually, each gets the benefit of the ₹2,00,000 interest cap on the self-occupied flat, rather than the couple sharing one cap. Neither is assessed as an association of persons, and no separate return is filed for the joint holding.
Compliance checklist and due dates
- Record the ownership shares in the sale deed or a written arrangement so they are definite and ascertainable.
- Ensure each co-owner's contribution to the purchase price and to the loan repayment is traceable to their own funds.
- Each co-owner claims interest on their share, subject to their own cap under section 22(2) and their own two-house limit under section 21(7).
- Do not file a separate return for the co-ownership; sub-section (1) rules out association-of-persons treatment.
- Where a co-owner is not a borrower on the loan, they cannot claim the interest even if they own a share.
Common mistakes
- Assuming joint owners share a single ₹2,00,000 interest cap. Sub-section (2) gives each co-owner their own entitlement.
- Claiming interest in the ratio of loan repayment while declaring income in the ratio of ownership, or vice versa. Both should follow the respective shares.
- Leaving shares undefined. Without definite and ascertainable shares, section 24(1) does not protect against association-of-persons assessment.
- A co-owner who is not a co-borrower claiming the interest deduction.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.