Budget 2025 Anticipations: The Institute of Chartered Accountants of India (ICAI) has put forward a proposal for the government aimed at promoting property ownership among women throughout the nation.
In its pre-budget submission to the government, ICAI highlighted that it is a common practice for many Indian families to register property in women’s names. Several state governments have also introduced incentives for registering property under women’s names by offering lower stamp duty rates.
Nonetheless, according to ICAI, two specific provisions of the Income-tax Act, 1961, hinder women’s property ownership.
1. Deemed ownership of property
Under section 27(i) of the Income-tax Act, 1961, an individual who transfers property to their spouse is automatically considered the owner of that property.
ICAI pointed out that “the provision under section 27 serves as a barrier by deeming the transferor-spouse as the owner.”
Additionally, it dissuades individuals from gifting or transferring property to their spouse unless in certain cases:
- Transfers made to a spouse under an agreement to live separately.
- Transfers made to a minor married daughter.
“This restrictive provision discourages individuals from transferring property to their spouse, thus undermining the advantages of stamp duty reductions provided by state governments,” ICAI stated.
2. Clubbing of income
The overall income of an individual incorporates income from any property that has been transferred, directly or indirectly, to the spouse due to the clubbing of income regulation under section 64(1).
Recommendations from ICAI
ICAI emphasized that granting property ownership rights to women could be a pivotal move toward empowering them and improving their economic status.
Consequently, it has proposed that Budget 2025 should abolish the restrictive deemed ownership clause under section 27 and the clubbing regulations outlined in section 64(1)(iv)/(vi). This change would promote property ownership among women.
Joint Taxation for Married Couples
Furthermore, ICAI has suggested that the government should facilitate joint taxation for married couples by introducing consolidated tax slabs within the new tax regime. This approach would benefit families with a single income earner.