Salary Income Tax
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Income Of Other Persons Included In Assessee's Total Income

Income of other Persons are included in the income of Assessee in certain circumstances. These provisions are referred as “Clubbing of Income”.

Under the following circumstances the clubbing of Income provision is applicable :

  1. Transfer of income without transfer of assets
  2. Revocable Transfer of assets
  3. Income from assets transferred to the spouse for inadequate consideration.
  4. Clubbing of Income of a minor child.

Where an Individual is Assessable for Income of his Minor Child

Instances of Clubbing Of Incomes

  • When the assessee is assessable for the remuneration received by the Spouse 64(1):

An individual would be chargeable to tax on the salary that would be
Received by his spouse from a concern in which the individual has substantial interest. It means that if Mrs. A is receiving salary from a company X ltd where her husband B is a director and having substantial interest then the salary of Mrs. A would not be taxable in the hands of Mrs. A but would be taxed in the hands of Mr. B.

  • When an individual is assessable to income on an asset including a House Property transferred to a son’s wife directly or indirectly without adequate consideration 64(1):

When the individual transfers an asset [at any time after 31.5.1973] inclusive of House Property to his son’s wife for inadequate consideration or no consideration then the Income of such an asset that accrues to the son’s wife is to be added in the income of the transferor.

  • Where an individual is assessable for income of his minor child

Income of minor child shall be clubbed in the hands of the parents whose total income before such clubbing is greater.

There are certain exceptions to the aforesaid clubbing provision:

  1. The child earns any Income on special skill or talent
  2. The minor child suffering from any disability specified u/s 80U.\

Further Deduction of Rs.1500 under Sec 10(32) will be allowed where the Income is clubbed.

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