Sections 15-18 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
These four sections follow the rules on unborn persons and the rule against perpetuity. As per the text of the Act consulted, section 15 deals with a gift to a class where it fails for some members, section 16 with later interests that depend on a failed prior interest, section 17 with a direction to accumulate income, and section 18 with transfers for the benefit of the public.
Section 15: if an interest for a class fails for some members under sections 13 and 14, it fails for those persons only, not for the whole class. Section 16: if a prior interest fails under sections 13 and 14, a later interest created in the same transaction to take effect after or on its failure also fails. Section 17: a direction to accumulate income for longer than the life of the transferor or eighteen years from the date of transfer is void for the excess, but accumulation for debts, portions for children or remoter issue, or preservation or maintenance of the property is allowed. Section 18: sections 14, 16 and 17 do not apply to a transfer for the benefit of the public.
Section 15: a transfer to a class
Section 15 applies where an interest is created for a class of persons, and the interest fails as to some members because of the rules in sections 13 and 14. In that case "such interest fails in regard to those persons only and not ". The words in square brackets are shown as amended wording in the copy consulted.
Example. Leela Menon transfers a property to her friend Asha for life, and then to "all the children of Asha". Suppose, because of sections 13 and 14, the interest cannot take effect for some of those children. Section 15 says it fails for those children only; the others in the class are not affected. Whether any child falls within the failure depends on the exact wording and facts, so the document needs to be tested against the earlier sections, ideally in a legal consultation before it is signed. Our article on sections 13 and 14, unborn persons and the rule against perpetuity sets out those rules.
Section 16: failure of a prior interest
The section is printed with an opening square bracket in the copy consulted. It says: where, by reason of any of the rules in sections 13 and 14, an interest created for the benefit of a person or of a class fails in regard to such person or the whole of such class, any interest created in the same transaction and intended to take effect after or upon failure of such prior interest also fails.
In short, if the first link in a chain fails because of sections 13 and 14, the next link, which was meant to take effect after or on that failure, fails too.
Example. Ravi Pandey transfers land to his unborn grandson's line in a way that breaks section 14, and adds that if that gift fails, the land goes to a cousin. Under section 16, the gift to the cousin, meant to take effect on failure of the prior interest, also fails. Anyone drafting a back-up gift should be aware of this and should not rely on it as a safety net for a gift that is bad under sections 13 and 14.
Section 17: direction for accumulation
Accumulation means adding the income to the capital instead of paying it out. Section 17(1) deals with a direction that income arising from the property shall be accumulated, wholly or in part, for a period longer than:
- (a) the life of the transferor, or
- (b) a period of eighteen years from the date of transfer.
Such a direction is void to the extent to which the period exceeds the longer of the two periods. At the end of that longer period, the property and the income are to be disposed of as if the period directed for accumulation had elapsed.
So the permitted accumulation is whichever is longer: the transferor's life or eighteen years from the date of transfer.
Example. Naveen Gupta transfers an investment portfolio to a trustee on 1 April and directs that all income be added to capital for forty years. If Naveen lives for ten years, the longer of the two periods is eighteen years from the date of transfer. The direction is void to the extent it exceeds that period. At the end of the eighteen years the property and accumulated income are dealt with as if the forty years had elapsed.
Purposes that are not affected
Section 17(2) says the section does not affect any direction for accumulation for the purpose of:
| Purpose | As printed |
|---|---|
| (i) | Payment of the debts of the transferor or of any other person taking any interest under the transferor |
| (ii) | Provision of portions for children or remoter issue of the transferor or of any person taking any interest under the transfer |
| (iii) | Preservation or maintenance of the property transferred |
Such a direction "may be made accordingly". A direction to accumulate income for one of these three purposes is therefore outside the time limit in sub-section (1). The section does not say more, and nothing here should be read as a promise that a given clause is covered; the facts must fit the words.
Example. Priyanka Das transfers a rental building and directs that part of the rent be set aside for repair of the building. That is a direction for the preservation or maintenance of the property transferred, which sub-section (2)(iii) leaves unaffected.
Tax on accumulated income is outside this Act; see our income-tax guides.
Section 18: transfer for the benefit of the public
Section 18 reads: the restrictions in sections 14, 16 and 17 shall not apply in the case of a transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.
The copy consulted prints a closing square bracket after this section, which marks the end of amended wording. This section lifts the limits of sections 14, 16 and 17 for such a transfer. It does not lift section 13.
Example. A charitable transfer for the advancement of health may direct accumulation of income for longer than the periods in section 17(1), because section 18 says section 17's restriction does not apply to a transfer of this kind. Whether a particular transfer is for the benefit of the public in one of the stated ways depends on its terms; the Act's list ends with "any other object beneficial to mankind".
Checking a clause against these sections
- Identify whether the transfer is to a class and whether any member could be an unborn person.
- If a back-up gift is given on failure of a prior gift, check whether the prior gift can fail under sections 13 and 14; the general rules on later gifts are in our article on sections 27 to 30.
- If income is to be accumulated, count the period against the life of the transferor and eighteen years.
- Check whether the accumulation is for a purpose named in section 17(2).
- If the transfer is for public benefit, check the words of section 18.
Need help with a long-term family or charitable transfer?
Directions to hold income for years, gifts to a class and back-up gifts are easy to get wrong. We can review the draft and the sections that apply through a legal consultation.
Key takeaways
- A class gift that fails for some members under sections 13 and 14 fails for those members only (section 15).
- A later interest meant to take effect after or on failure of a prior interest that fails under sections 13 and 14 also fails (section 16).
- Accumulation of income beyond the transferor's life or eighteen years from the date of transfer is void to the excess (section 17(1)).
- Accumulation for debts, portions for children or remoter issue, or preservation or maintenance of the property is outside that limit (section 17(2)).
- Sections 14, 16 and 17 do not apply to a transfer for the benefit of the public of the kind section 18 describes.
- Later amendments and State changes should be checked.
Read next
- Sections 13 and 14: transfer for unborn person and rule against perpetuity
- Sections 19 and 20: vested interest and unborn person's vested interest
- Section 21: contingent interest and when it becomes vested
- Introduction to the Transfer of Property Act, 1882
Disclaimer: Based on a publisher's print of the Transfer of Property Act, 1882 showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003), as consulted on 2 October 2026. State amendments, later amendments, stamp duty and registration charges are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.