Section 96
Section 96: transfer of income without transfer of assets
Section 96 opens the Act's 'clubbing' chapter, which taxes certain income of other persons as if it were the taxpayer's own income. This particular section targets a simple avoidance technique: giving away the right to receive income from an asset, while keeping ownership of the asset itself. The Act treats that income as still belonging to - and taxable in the hands of - the person who made the transfer.
What Section 96 says
All income arising to any person by virtue of a transfer - whether revocable or not, and whether the transfer was made before or after this Act commenced - is chargeable to income-tax as the income of the transferor and is included in the transferor's total income, provided there was no transfer of the underlying asset from which the income arises.
The key condition: no asset transfer
This section applies specifically where only the income (or the right to receive it) has been transferred, but the asset that generates that income remains with the original owner. If the asset itself is genuinely transferred, this particular clubbing rule does not apply (though Section 97 may apply to certain asset transfers that are revocable).
Frequently asked questions
Does it matter whether the income transfer is revocable or irrevocable?
No - Section 96 applies whether the transfer of income is revocable or not, as long as there was no corresponding transfer of the underlying asset.
How is Section 96 different from Section 97?
Section 96 deals with a transfer of income alone, with no transfer of the asset generating it. Section 97 deals with a transfer of the asset itself, where that asset transfer is revocable.
Related sections
Want this applied to your actual filing, not just explained?
Get clarity on clubbing of income rules from our tax teamLast updated 9 September 2026