"Clubbing Income of Spouse – A Practical Approach"
Lot of misunderstanding persists among the taxpayers about the clubbing of income and pattern of clubbing of income. There is a chance of cut the tax burden by circulating the income to various family member . To control such practices, certain provisions have been made for clubbing of income of wife, son’s wife and minor children. However, in this article I will point only the provisions of clubbing of income comes under section 64 1(ii), 64(iv) about clubbing of income of spouse.
As per Section 64(1) of the Income-tax Act, the following income of individual (wife/ husbant) can be clubbed with spouse’s income-
(i) Any income from assets transferred directly or indirectly by the spouse, otherwise than for adequate consideration or in connection with an agreement to live apart. Such assets may be immovable property as well as movable property like cash, shares, debentures etc.
(ii) salary, Commission, fee or any other form of remuneration whether in cash or in kind from a concern in which the husband has a substantial interest.
- However, no clubbing will be made in case the wife/husband possesses technical or professional qualification and the income is solely attributable to the application of her technical or professional knowledge and experience-Section 64(1)
- It may be noted that the above provisions are also applicable in case of transfer or any assets or in case of above referred payments by a wife to her husband or vice-versa.
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