Section 97
Section 97: chargeability of income where the transfer of an asset is revocable
Section 97 extends the clubbing logic of Section 96 to cases where the asset itself (not just the income from it) has been transferred, but the transfer is revocable. If the giver retains the power to take the asset back, the income it produces continues to be taxed as the giver's own income - unless the transfer is a genuinely irrevocable trust or arrangement from which the giver derives no benefit.
The general rule
All income arising to any person by virtue of a revocable transfer of assets is chargeable to income-tax as income of the transferor, and is included in the transferor's total income.
The exception: genuinely irrevocable trusts and transfers
This rule does not apply where the transfer is by way of a trust that is not revocable during the beneficiary's lifetime (or, for any other kind of transfer, is not revocable during the transferee's lifetime), and the transferor derives no direct or indirect benefit from the income in either case.
What happens if the power to revoke later arises
Even where the exception above initially applies, if and when the power to revoke the transfer arises, all income arising from that point becomes chargeable to income-tax as income of the transferor, and is included in the transferor's total income from that time.
Frequently asked questions
Is income from every asset transfer taxed back to the transferor?
No - only where the transfer is revocable, or where a trust/transfer that was initially irrevocable later becomes revocable (i.e. the power to revoke arises). A genuinely irrevocable trust or transfer from which the transferor gets no benefit is excluded.
What if a trust is irrevocable now but could become revocable later?
Once the power to revoke the transfer arises, income arising from that point is taxed as the transferor's own income and included in their total income, even if the arrangement was treated as irrevocable earlier.
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