Income clubbing rules, income clubbing provisions | Going to file ITR? Know tax rules for clubbing income, going to file ITR? Know the tax rules for clubbing income
Income tax rules for clubbing income
- Section 64 of the Income Tax Act lays down the rules for clubbing income.
- Income earned directly or indirectly by the spouse is added to the income for paying tax.
- The income earned by a minor child during the financial year should also be added to the income of the taxpayer parent.
Generally, you have to pay tax on your income. However, in certain circumstances, you may need to add your family member’s income. As per Income Tax Act, amalgamation of income means that the income of other person is included in the total income of the assessee and they pay the applicable tax thereon. For example, if the income of your spouse or minor child is added to the income of the taxpayer, then it is called the total income.
If you are planning to transfer any of your assets, income to any other person as a means of tax planning, you need to know that such transfer attracts clubbing provisions under the Indian Income Tax Act could.
In fact, even actual gifts made to your spouse or minor child may have these income tax implications. It will help you a lot if you already get some idea about clubbing provisions under Indian Income Tax Act to avoid any tax notice from the department. Section 64 of the Income Tax Act lays down the rules for clubbing income.
Spouse’s clubbing income
According to the IT Act, income arising directly or indirectly to the spouse of a person by way of salary, commission, fee or any other form of remuneration, in cash or kind, shall be added to the income of the tax paying partner. Will go There are some exceptions as well. For example, if the spouse has technical or professional qualifications and the income is solely due to the use of their technical or professional knowledge and experience, then such income cannot be clubbed. Also, if the couple is living separately, the property cannot be clubbed.
minor child clubbing income
Any income earned by a minor child during the financial year should also be added to the income of the taxpayer parent and taxed accordingly. If both parents are earning, the income of the minor child should be added to the income of the parent whose total income is higher. However, if the minor child is suffering from any kind of disability specified under section 80U of the Income Tax Act, then the income cannot be clubbed.
Taxpayers should remember that the income of a minor child should not arise from physical work performed by the child or any activity relating to the use of his skills, talents or special knowledge and experience.
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