Section 25 of the Income-tax Act, 2025 defines who is treated as owner for sections 20 to 24. It covers transfers to a spouse or minor child without adequate consideration, impartible estate holders, co-operative society allottees, possession under part performance, and leases of twelve years or more.
What section 25 does
Section 20 taxes property owned by the assessee. Section 25 decides who counts as an owner — and it goes well beyond whoever is named on the title deed. It is the anti-avoidance backstop for the house property head.
The section is an inclusive definition operating for the purposes of sections 20 to 24. It corresponds to section 27 of the Income-tax Act, 1961, although part of the old section 27 ground is also picked up by section 21.
The clauses most likely to catch an ordinary taxpayer are (a), which treats a person who transfers property to a spouse or minor child without adequate consideration as still the owner, and (d), which treats someone in possession under part performance of a contract as the owner even without registration.
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 |
|---|---|---|
| 27(i) | Transfer to spouse or minor child without adequate consideration | 25(a) |
| 27(ii) | Holder of an impartible estate | 25(b) |
| 27(iii) | Member of a co-operative society, company or AOP under a house building scheme | 25(c) |
| 27(iiia) | Possession under part performance, section 53A of the Transfer of Property Act, 1882 | 25(d) |
| 27(iiib) | Rights under a lease of not less than twelve years | 25(e) |
| 22 | Charge on the owner | 20 |
Section 25 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Clause (a) — transfers to a spouse or minor child
An individual who transfers any property without adequate consideration to their spouse, or to a minor child, is treated as the owner. Two carve-outs apply: a transfer to a spouse under an agreement to live apart is excluded, and a transfer to a married daughter is excluded. This clause is why gifting a flat to a spouse does not move the rental income out of your hands.
Clause (b) — impartible estates
The holder of an impartible estate is deemed to be the individual owner of all the properties comprised in the estate. An impartible estate cannot be divided among heirs, so without this clause there would be no identifiable owner to tax.
Clause (c) — society, company and association allottees
A member of a co-operative society, company or other association of persons to whom a building or part of one is allotted or leased under a house building scheme is treated as the owner. This is the clause that makes the occupant of a co-operative housing society flat the owner for tax, even where the society holds the legal title.
Clause (d) — possession under part performance
A person allowed to take or retain possession of a building or part of it in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 is treated as the owner. A buyer who has paid, taken possession and is willing to perform their part is therefore taxed on the property even if the conveyance has not been registered.
Clause (e) — long leases and society share acquisitions
A person who acquires rights in or with respect to a building is treated as the owner — but rights by way of a lease from month to month, or for a period not exceeding one year, are excluded. Sub-clause (i) covers transfer by sale, exchange, or an original or extendible lease for a term of not less than twelve years. Sub-clause (ii) covers rights arising from becoming a member of, or acquiring shares in, a co-operative society, company or association, or from any agreement or arrangement that has the effect of enabling the enjoyment of the property — but not a transaction by way of sale, exchange or lease.
Worked example
Four situations in tax year 2026-27, none of which involves a registered title in the taxpayer's name.
| Situation | Who is taxed | Clause |
|---|---|---|
| A husband gifts a let-out flat to his wife; she receives the rent | The husband remains the deemed owner and is taxed on the house property income | 25(a) |
| A buyer has paid in full, taken possession, but the sale deed is unregistered | The buyer is the deemed owner | 25(d) |
| A member occupies a flat allotted under a co-operative housing society scheme | The member, not the society | 25(c) |
| A company takes a fifteen-year lease of an office floor and sub-lets it | The lessee is a deemed owner, as the lease is not less than twelve years | 25(e)(i) |
| A tenant holds an eleven-month renewable lease | Not a deemed owner — expressly excluded | 25(e) |
In the first case, note that section 25(a) operates independently of the clubbing provisions in Chapter V. The property income is computed in the husband's hands because he is the owner for this head, not merely because income is clubbed.
Compliance checklist and due dates
- Before concluding that a property is not yours for tax, run through all five clauses of section 25.
- Gifting property to a spouse or minor child does not shift the house property income — plan on the basis that clause (a) applies.
- A buyer in possession under an unregistered agreement should report the property income; clause (d) makes them the owner.
- Co-operative society members should report society flats in their own hands under clause (c).
- Check lease tenure: twelve years or more brings clause (e)(i) into play; a lease of one year or less does not.
- Remember that section 25 operates only for sections 20 to 24 — it does not define ownership for capital gains.
Common mistakes
- Assuming a gift deed to a spouse moves the rental income. Clause (a) keeps the transferor as owner.
- Treating a transfer to a married daughter the same as one to a minor child. Married daughters are expressly excluded.
- Overlooking that a transfer to a spouse under an agreement to live apart is outside clause (a).
- Believing that no registered deed means no tax. Clause (d) taxes possession taken under part performance.
- Applying section 25 to decide ownership for capital gains. It is confined to sections 20 to 24.
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.