Gifted a Flat to Your Wife or Husband? Who Pays Tax on the Rent
Putting a rented flat in your spouse's name doesn't shift the tax. Clubbing rules tax the rent in the giver's hands. What the law says and what still makes sense.
A common idea: "My wife has no income. If I gift her the flat, the rent will be taxed at her lower rate." Unfortunately, the law anticipated this.
The clubbing rule
The Income Tax Department explains that if an individual transfers an asset to their spouse otherwise than for adequate consideration, the income from that asset is clubbed with the transferor's income. This was section 64(1)(iv) of the 1961 Act; in the Income-tax Act, 2025 the clubbing provisions sit in section 99, according to section-mapping commentary.
For house property specifically, the Department notes the rule works through the deemed owner provision (section 27 of the 1961 Act): the person who gifted the flat to the spouse is treated as its owner for tax on the rent.
What that means in practice
| Situation | Who is taxed on the rent |
|---|---|
| You gift a flat to your spouse, no consideration | You |
| Your spouse buys the flat with their own income or savings | Your spouse |
| Your spouse buys it with money you gifted | The Department's FAQ says clubbing continues even when gifted money is converted into another asset |
Changing whose name is on the flat changes ownership. It doesn't change whose income the rent is, if no consideration was paid.
The gift itself
- Income tax on the gift: Gifts from a "relative", which includes a spouse, are not taxed in the recipient's hands under the gift rules.
- Stamp duty: Maharashtra charges stamp duty on gift deeds; concessional rates apply for certain family members. See gift deed stamp duty in Maharashtra.
When gifting still makes sense
People gift property for reasons other than tax: succession planning, a spouse who lives in India while you're abroad, or simpler management. Those can be good reasons. Just plan the tax on the basis that the rent stays yours.
For NRI couples
Where one spouse is an NRI and the other resident, the residential status of the person taxed affects TDS on rent and how the income is reported. Discuss this with a CA familiar with NRI taxation.
Related reading
Planning ownership of a rented flat? Book a video call.
Sources
- Income Tax Department FAQ: Clubbing of income from assets transferred to spouse
- Patron Accounting: Clubbing of income under the Income-tax Act, 2025 (section mapping)
- CalcGuru: Gifting property to family, stamp duty and clubbing
General information, not tax advice. Speak to a chartered accountant before acting.
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