Two friends, two business partners, or an unmarried couple who want to buy an apartment together in Bengaluru routinely encounter the belief that Indian law reserves joint ownership for family. It does not. The Transfer of Property Act, 1882 and the Registration Act, 1908 contain no relationship test, and the Karnataka Apartment Ownership Act, 1972 imposes none either. The real obstacles lie downstream: banks that restrict co-applicants on a joint home loan to close relatives, and a tax and stamp duty treatment of any later transfer between the co-owners that turns almost entirely on how the instrument is characterised. This piece sets out what the statutes permit, what the lenders actually do, and what it costs when one co-owner exits.
No Relationship Test in the Governing Statutes
Property ownership in India is governed by civil law rather than personal law, and that distinction does the work here. Because the Transfer of Property Act, 1882 and the Registration Act, 1908 regulate property transactions without reference to the Hindu Marriage Act, Muslim personal law or any comparable regime, the marital status or blood relationship of the buyers is irrelevant to the purchase itself. Neither statute requires co-purchasers to be married or related.
Registration follows the same logic. Section 17 of the Registration Act, 1908 requires registration of documents transferring immovable property, and the Act requires the passport-size photograph and fingerprints of each buyer and seller to be affixed to the document. There is no statutory bar to registering property in the joint names of unrelated persons. Both names appear on the title deed and in the land registry records, and the sale deed can define ownership shares in whatever ratio the parties agree, whether 50/50, 60/40 or otherwise.
Joint Tenancy and Tenancy in Common
Indian law recognises two principal forms of co-ownership, and the difference matters most on death. Joint tenancy requires four unities: time (acquisition at the same time), title (from the same source), interest (equal shares) and possession (an undivided right to use the entire property). Joint tenants hold a right of survivorship, so a deceased owner's rights pass automatically to the surviving owners. Tenancy in common requires none of the four unities. Co-owners may acquire their interests at different times, from different sources and in unequal shares, and there is no survivorship: each holds an undivided interest in the whole property and can will away that share independently.
The default matters for unrelated buyers. Absent specific language creating a joint tenancy with survivorship, co-ownership in India is presumed to be a tenancy in common, so each share passes by will or intestate succession rather than to the other co-owner. Two unrelated purchasers who have not made wills leave their shares to their respective legal heirs, who then become co-owners with the survivor.
Karnataka: The Apartment Act and the RERA Template
The Karnataka Apartment Ownership Act, 1972 (Karnataka Act 17 of 1973) governs apartment ownership in the state and does not restrict joint ownership to related parties. The model agreement for sale issued under the Real Estate (Regulation and Development) Act, 2016 for apartments in Karnataka expressly contemplates joint allottees:
"In case there are Joint Allottees all communications shall be sent by the Promoter to the Allottee whose name appears first and at the address given by him/her which shall for all intents and purposes to consider as properly served on all the Allottees."
The template draws no distinction between related and unrelated joint purchasers. All joint allottees are treated alike, the only practical consequence being that the promoter serves communications on the first-named allottee.
The Lending Problem: Co-Owner Is Not Co-Applicant
The genuine friction is at the bank, and it is a matter of credit policy rather than legality. Lender policy commonly restricts co-applicants on a joint home loan to immediate family. HDFC Bank's stated position is that "generally, an immediate family member can be your co-applicant," with the co-applicant permitted to be salaried or self-employed, and non-resident Indians eligible. The same source draws the distinction that creates the difficulty:
"A co-owner is a joint owner of the property whereas a co-applicant need not be a part owner of the property. The basic principle is that all co-owners of the property will have to be co-applicants of the home loan. However, all co-applicants need not necessarily be co-owners."
The asymmetry is one-directional. A co-applicant need not own, but an owner must be an applicant. Unrelated parties who want to be joint owners of a financed property must therefore both be co-applicants, which runs into the very relationship restriction lenders apply to co-applicants. They may accordingly face difficulty obtaining a joint home loan from traditional banks, although some lenders may approve on the strength of individual credit profiles.
Three structures respond to this: one party takes the loan while both are co-owners; each party obtains separate financing; or the parties approach lenders willing to underwrite a joint loan for unrelated applicants with strong individual profiles. The first is the most common and the most exposed. It creates a mismatch between the borrowing and the title, with the non-borrowing co-owner contributing to repayment without appearing on the loan, and only a written co-ownership agreement records what those contributions buy.
One Co-Owner Selling Out: Section 44 and the Release Deed
Section 44 of the Transfer of Property Act, 1882 expressly permits a co-owner to transfer a share:
"Where one of two or more co-owners of immoveable property legally competent in that behalf transfers his share of such property or any interest therein, the transferee acquires as to such share or interest ... the transferor's right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting at the date of the transfer, the share or interest so transferred."
Four propositions follow. A co-owner can transfer only his or her own share, not the entire property, unless he or she is the sole remaining co-owner. The transferee acquires the right to seek partition. No consent of the other co-owners is required, and the transfer is valid even without their knowledge. The share passes subject to the conditions and liabilities affecting it at the date of transfer.
Release, Relinquishment or Conveyance?
Indian courts distinguish a release or relinquishment deed from a conveyance, and the distinction drives both stamp duty and tax. A release deed is an instrument by which one co-owner renounces a claim or right in favour of another. It is not a conveyance but a relinquishment of an existing right. As the Madras High Court put it in Krishnakumari v. Ponnusamy:
"Release is nothing but a relinquishment of an existing right in favour of the co-owner for a consideration, which necessarily need not be the market value ... Once the relinquishment has taken place, the releasor has divested of all his/her rights."
The Supreme Court in Kuppuswami Chettiar v. A.S.P.A. Arumugam Chettiar stated the mechanism compactly: "A release deed can only feed title but cannot transfer title." The instrument consolidates title in the beneficiary by removing the releasor's competing claim rather than transferring title in the conventional sense. The Gujarat High Court in Shalin Mukeshbhai Patel v. State of Gujarat (2022) drew the line by reference to the character of the co-owners' title:
"A deed of release cannot fall within the definition of conveyance. It is only a release by which one of the co-owners relinquishes the share in favour of the other. Where two parties are co-owners, with a title which cannot be demarcated or fixed and there is joint possession and commonality of title, the documents transferring/releasing the title by one of the co-owners to the other would be a release deed."
The characterisation is not, however, in the parties' gift. Where a release is executed for consideration and discloses an intention to transfer all rights, it may be treated as a conveyance. Krishnakumari again:
"The release when effected upon receipt of consideration becomes a deed of conveyance. A registered instrument styled a release deed ... may operate as a conveyance, if the document clearly discloses an intention to effect a transfer."
The outcome is therefore fact-dependent. The label on the instrument does not settle its character; the presence of consideration and the disclosed intention do much of the work.
The Release Cannot Be Undone Unilaterally
Once executed and registered, a release deed cannot be unilaterally revoked by the releasor. Krishnakumari applied to a release the rule it stated for a sale:
"A deed of cancellation of a sale unilaterally executed by the transferor does not create, assign, limit or extinguish any right, title or interest in the property and is of no effect ... The proper course would be to re-convey the property by a deed of conveyance by the transferee in favour of the transferor."
Revocation requires mutual consent or a court decree on grounds such as fraud or non-payment of consideration. The change in ownership is, for practical purposes, permanent.
Stamp Duty in Karnataka: Article 45
The Karnataka Stamp Act, 1957 treats a release differently from a conveyance. Article 45 defines a release as "any instrument (not being such a release as is provided for by section 24,) whereby a person renounces a claim upon another person or against any specified property."
The duty then splits on relationship, and this is where unrelated co-owners lose the advantage they might have expected. A release between family members attracts a reduced duty, significantly lower than conveyance duty, and the Karnataka High Court in Mrs Razia Begum v. State of Karnataka (2023) confirmed that the legislature "had prescribed a reduced stamp duty" for release deeds. A release not between family members, however, attracts the same duty as a conveyance under Article 20(1), charged on the market value of the property, or on the amount or value of the claim or part of the claim renounced, or on the consideration for the release, whichever is higher.
The gap is material. Conveyance duty in Karnataka is typically 5 to 6% of the property value, with registration charges of a further 0.5 to 1% levied separately. For a family release the duty is often nominal; for unrelated co-owners it tracks conveyance duty, so the saving that motivates release-deed drafting in family transfers is largely unavailable. On the original purchase, joint ownership by unrelated parties makes no difference to cost: the charges are the same as for a single purchaser.
Tax on the Exit
Capital Gains
A relinquishment by one co-owner in favour of another falls within the statutory definition of "transfer." Section 2(47) of the Income Tax Act, 1961 defines transfer to include "the sale, exchange or relinquishment of the asset; or the extinguishment of any rights therein," and Section 45 charges profits or gains from the transfer of a capital asset in the year of transfer, subject to exemptions under Section 47, exclusions under Section 2(14) and reinvestment benefits.
Whether a release attracts capital gains tax therefore depends on its characterisation. A pure release without consideration may not attract capital gains tax, there being no transfer for consideration, though the Income Tax Act does not explicitly exempt release deeds. A release with consideration attracts tax on the consideration received or the stamp duty value, whichever is higher, and a conveyance attracts full capital gains tax on the same measure.
The gain is computed as the full value of consideration less the cost of acquisition, cost of improvement and transfer expenses. Section 50C supplies the trap: where the stamp duty value of land or a building exceeds the consideration stated in the deed, the stamp duty value is treated as the full value of consideration. A release stating consideration of ₹10 lakh against a stamp duty value of ₹20 lakh is taxed on ₹20 lakh. Tax can therefore arise on money never received.
Holding period determines the character of the gain: property held for two years or less produces a short-term capital gain taxed at the applicable slab rate, up to 30% for individuals, and property held longer produces a long-term capital gain. Sections 54 and 54F offer exemptions where proceeds are reinvested in a residential property within one year before or two years after the transfer, Section 54 where the original property was a residential house and Section 54F for proceeds from any long-term capital asset. These exemptions typically apply to sales to third parties rather than transfers between co-owners.
Section 56(2)(x): The Nominal-Consideration Trap
Under-pricing the release does not avoid tax; it moves it. Where property is received for inadequate consideration, the difference between the fair market value and the consideration paid is taxable as income in the recipient's hands under Section 56(2)(x). A release recorded at ₹1 against a market value of ₹50 lakh exposes the receiving co-owner to tax on the shortfall. What "inadequate consideration" means is fact-dependent, which is itself a source of dispute with the tax authorities.
TDS and GST
Section 194-IA requires the transferee of immovable property other than agricultural land to deduct tax at source at 1% of the consideration. It applies to a release characterised as a transfer with consideration, and would not apply to a pure relinquishment without consideration.
GST arises only on the original purchase, and only if the apartment is under construction: 5% for affordable housing and 12% for other residential property, with none on a completed or ready-to-occupy apartment. Joint purchase does not change the liability, which is levied on the total consideration regardless of the number of buyers. A release deed between co-owners is not subject to GST, being a relinquishment of rights rather than a supply of goods or services.
Deductions on the Original Purchase
Stamp duty and registration charges paid on purchase are deductible under Section 80C, up to ₹1.5 lakh per financial year, claimable by both co-owners in proportion to their ownership. Home loan interest is deductible under Section 24 up to ₹2 lakh per year. Both depend on the co-owners also being co-borrowers, which returns the analysis to the lending problem: the structure that solves the credit hurdle by putting one party on the loan alone also forfeits half the tax benefit.
The Uncertainties Worth Naming
Several points remain genuinely unsettled. The characterisation of a release with consideration is fact-dependent, and courts have held such an instrument may be treated as a conveyance where it discloses an intention to transfer all rights. That uncertainty runs through both stamp duty and capital gains treatment. Stamp duty valuation by the Sub-Registrar may exceed the actual consideration, producing liability under Section 50C, though a valuation dispute can be referred to a Valuation Officer. A co-owner who receives a release can seek partition against any remaining co-owners, which may force a sale. And the Supreme Court in Angadi Chandranna v. Shankar (2025) held that release deeds executed by a karta over the entire coparcenary property of a joint Hindu family are illegal and void, a sign of closer judicial scrutiny of release deeds in joint family contexts.
Practical Takeaways
- Unrelated parties can jointly purchase and register immovable property in Karnataka. Define the ownership shares expressly in the sale deed rather than relying on defaults.
- Put a written co-ownership agreement in place covering each party's share, what happens if one wants to exit (right of first refusal, an agreed valuation method, a timeline for sale), responsibility for loan repayment, property tax and maintenance, and a dispute resolution mechanism.
- Expect the bank, not the statute, to be the obstacle. If both parties cannot be co-borrowers, record how the non-borrowing co-owner's contributions are treated, and note that the deductions under Sections 24 and 80C follow the borrowing.
- Each co-owner should execute a will covering the share, since a tenancy in common carries no survivorship and an intestate share passes to heirs rather than to the other co-owner. Consider life insurance covering the loan.
- On an exit, use a release deed rather than a conveyance, stating whether it is with or without consideration, the amount and payment mechanics if with, the intention as to transfer of all rights and interest, and that no consent of other co-owners is required. Register it at the Sub-Registrar's office to bind third parties.
- Do not assume a release saves stamp duty between unrelated co-owners. Under Article 45 a non-family release is charged at conveyance rates on the higher of market value, claim renounced or consideration.
- Obtain a stamp duty valuation before executing, to fix the duty and anticipate Section 50C. If consideration is paid, keep it at fair market value: too low invites Section 56(2)(x) in the recipient's hands, and Section 50C taxes the releasor on the stamp duty value regardless. Deduct TDS at 1% under Section 194-IA and document it in the deed.
- Treat the release as irreversible. Once registered it cannot be revoked unilaterally; undoing it requires mutual consent, a re-conveyance, or a court decree.
Key Authorities
- Transfer of Property Act, 1882, Section 44 — a co-owner may transfer his or her share without the other co-owners' consent; the transferee takes the right to joint possession and to enforce partition. Source
- Registration Act, 1908, Section 17 — compulsory registration of documents transferring immovable property; no bar to registration in the joint names of unrelated persons. Source
- Krishnakumari v. Ponnusamy, Madras High Court, 18 March 2015 — a release for valuable consideration disclosing an intention to transfer may operate as a conveyance; a registered instrument cannot be unilaterally cancelled. Source
- Kuppuswami Chettiar v. A.S.P.A. Arumugam Chettiar, AIR 1967 SC 1395 — "A release deed can only feed title but cannot transfer title."
- Shalin Mukeshbhai Patel v. State of Gujarat, Gujarat High Court, 12 December 2022 — a deed of release between co-owners with joint possession and commonality of title does not fall within the definition of conveyance. Source
- Karnataka Stamp Act, 1957, Article 45 — duty on a release not between family members is the same as conveyance duty under Article 20(1) on the higher of market value, claim renounced or consideration. Source
- Mrs Razia Begum v. State of Karnataka, Karnataka High Court, 25 September 2023 — confirms that the Karnataka Stamp Act prescribes a reduced duty for release deeds.
- Karnataka Apartment Ownership Act, 1972 (Karnataka Act 17 of 1973) — governs apartment ownership in Karnataka; contains no restriction of joint ownership to related parties. Source
- Karnataka RERA, Model Agreement for Sale (Apartment) — expressly contemplates joint allottees, with communications served on the first-named allottee. Source
- Income Tax Act, 1961, Section 2(47) — "transfer" includes sale, exchange or relinquishment of the asset and extinguishment of any rights therein. Source
- Income Tax Act, 1961, Sections 45, 50C, 54, 54F, 56(2)(x) and 194-IA — charge on capital gains; stamp duty value as full value of consideration; reinvestment exemptions; tax on receipt of property for inadequate consideration; 1% TDS on transfer of immovable property. Source
- Angadi Chandranna v. Shankar (2025), Supreme Court — release deeds executed by a karta over the entire coparcenary property of a joint Hindu family are illegal and void.
This analysis reflects the law as at July 2026. It is published for general information and does not constitute legal advice.