Clubbing of Income

On this page:

Clubbing of Income earned by Spouse

Salary, commission, fees or any other form of remuneration whether in cash or in kind from a concern in which you have a substantial interest will be clubbed.

However, this provision shall not apply in relation to,

  • any income arising to your spouse where your spouse possesses technical or professional qualifications, and

  • the income is solely attributable to the application of his or her technical or professional knowledge and experience.

The income shall be clubbed in the hands of you or your spouse whose total income (excluding the income referred to) is greater.

Advance-Tax Calculation Clubbing of Income

Once the income is included in the total income of either spouse, any such income arising in any succeeding year shall not be included in the total income of the other spouse unless the Assessing Officer is satisfied, after giving that spouse an opportunity of being hear, that is necessary so to do.

Meaning of Having Substantial Interest in a concern -

In the case of a company, if you or you and one or more of your relatives own beneficially not less than 20% of the voting power at any time during the previous year, then you will be treated as "Having Substantial Interest" in that company.

In the case of any other concern, if you or you and one or more of your relatives are entitled to not less than 20% of the profits of such concern, then you will be treated as having substantial interest in that concern.

Subject to section 27, income from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart, will be clubbed.

Income from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse will also be clubbed.

Top

Clubbing of Income earned by Son's Wife

Income from assets transferred directly or indirectly on or after 01.04.1973 to the son's wife by such individual otherwise than for adequate consideration, will be clubbed.

Income from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his son's wife, will be clubbed.

Top

Quantum of Income to be clubbed from assets transferred to Spouse or Son's Wife

When assets are transferred directly or indirectly by an individual to his spouse or son's wife, the following amounts shall be taken for clubbing -

Nature of Business Quantum of Income to be Clubbed
In the nature of contribution of capital as a partner, or being admitted into the benefits of partnership Interest Received X Amount received from the Individual
-----------------------------------------------
Total Investment
In any other case Income from the business X Amount received from the Individual
-----------------------------------------------
Total Investment

Top

Clubbing of Income of Your Minor Child

All income that accrues or arises to the minor child, not being a minor child suffering from any disability of the nature specified in section 80-U will be clubbed.

However, the following incomes earned by the minor child need not be clubbed: -

  1. Manual work done by him; or

  2. Activity involving application of his skill, talent or specialised knowledge and experience.

The income is to be clubbed in the hands of either of parents as per the conditions given below.

Situation - Where the Marriage In the hands of
Subsists Parent who has greater Total Income.
Does not subsist Parent who maintains the Minor Child.

Once the income is included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.

However, income tax exemption is available to the extent of Rs.1,500/- per child per annum.

Top

Clubbing of Income from Properties thrown into the Common Stock

When you being a member of a Hindu Undivided Family, after 31.12.1969, converts your separate property into the property of the family,

  1. Through the act of impressing separate property with the character of family property, or

  2. Throwing it into the common stock of the family, or

  3. Been transferred by you, directly or indirectly, to the family otherwise than for adequate consideration, whether held in the same form or converted into any other form,

then the income derived from the converted property shall be treated as your income and not as the family income.

Where the converted property has been the subject matter of a partition amongst the members of the family, the income derived from such converted property as is received by the spouse on partition shall be deemed to arise to the spouse from assets transferred indirectly by the individual to the spouse.

Subscribe to our Free Newsletter 'Online Tax Consultant'

Email

Name

Then

Don't worry -- your e-mail address is totally secure.
We promise to use it only to send you our Online Tax Consultant Newsletter.

Have questions related to Clubbing of Income? Ask Us

Top

Top

Top

New! Comments

Have your say about what you just read! Do you want us to add any other information related to this topic? Let us know.

submit to reddit

Protected by Copyscape Duplicate Content Detection Tool

Free Newsletter

Our Monthly newsletter ‘Online Tax Consultant’ is the ideal way to make sure you miss nothing in the world of Taxation in India.

Email

Name

Then

Income Tax Questions
Have Questions on Tax?

Salary Income Tax
Salary Taxation

House Property Tax
House Property

Capital Gains Income Tax
Capital Gains

Business Income Tax
Business Tax

Corporate Tax
Corporate Tax

Other Sources Income Tax
Other Sources