Clubbing of Income

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Meaning of Spouse =Husband Wife

                  Serious attention is required for those who have Individual Business in the Name of Self/Wife.  In case you have an Proprietorship concern in your name or in your wife's name, keep in mind that all income paid to spouse through  Proprietor Business will be included in the hand of  owner of Business which has been paid to spouse by way of Salary, Commission, Fees or Any other form of Remuneration whether paid in cash or in kind.

            Keeping in above serious things we should completely go through regarding Clubbing of Income which has been explained as per Draft Tax Code as under :- 

(1) The total income of any individual shall include
 (a) all income which accrues, directly or indirectly, 
  • to the spouse, by way of salary, commission, fees or any other form of remuneration, whether in cash or in kind, from a concern in which the individual has a substantial interest;
  • from assets transferred, directly or indirectly, to the spouse by the individual, otherwise than for adequate consideration, or in connection with an agreement to live apart; 
  • from assets transferred, directly or indirectly, to the son’s wife by the individual, otherwise than for adequate consideration; or
  • from assets transferred, directly or indirectly, to any other person by the individual otherwise than for adequate consideration, to the extent to which the income from such assets is for the immediate or deferred benefit of the spouse or son’s wife;

(b) all income which accrues to a minor child (other than a minor child being a person with disability or person with severe disability) of the individual, other than  income which accrues to the child on account of any :-
  • manual work done by the child; or
  • activity involving application of the skill, talent or specialised knowledge and experience of the child;
  • all income derived from any converted property or part thereof;
  • all income derived from any converted property which is received by the spouse or minor child upon partition of the Hindu undivided family of which the individual is a member.

(2) The provisions of sub-clause (i) of clause (a) of sub-section (1) shall not apply in relation to any income accruing to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of the technical or professional knowledge and experience of the spouse.

(3) The income referred to in sub-clause (i) of clause (a) of sub-section (1) shall,  notwithstanding anything contained therein, be included in the total income of the spouse whose total income (excluding the income referred to in that sub-clause) is higher.

(4) The Board may prescribe the method for determining the income referred to in sub clause (ii) and sub-clause (iii) of clause (a) of sub-section (1).

(5) The income referred to in clause (b) of sub-section (1) shall be included in the total income of :-
  • the parent who is the guardian of the minor child; or
  • the parent whose total income (excluding the income referred to in that
  • clause) is higher, if both the parents are guardians of the child.

(6) Where any income referred to in clause (b) of sub-section (1) is once included in the total income of a parent, any such income arising in the succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer considers it necessary to do so after giving an opportunity of being heard to the other parent.

(7) In this section, “property” includes any interest in property whether movable or immovable, the sale proceeds of such property, in whichever form and where the property, is converted into any other form of property by any method, such other property.


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