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Chapter- 9 Chapter
Clubbing -9
of Income Part- I
Clubbing of Income
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Chapter- 9 Clubbing of Income Part- I
Clubbing of Income
As per Income Tax Law, an assessee is liable to pay tax for
income accruing to him only and he is not liable to pay tax
on any other person’s income. But, there are exceptions to
this rule. These are mentioned under Sec. 60 to Sec. 64 in
Clubbing of Income. Clubbing of income means Income of
other person included in assessee’s total income.
For example:
1. Income of child is shown to be the income of the father
or mother and is taxable as income in the hands of father
or mother.
2. Income of husband which is shown to be the income of
his wife is clubbed in the income of husband and is
taxable in the hands of the husband.
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Chapter- 9 Clubbing of Income Part- I
Sec. 60: Transfer of Income without Transfer of Assets
Clubbed in the hands of: Transferor who transfers the income
Conditions: applicable even if such transfer is revocable or
not. Also applicable even if the transfer is affected before or
after the commencement of IT Act.
Sec. 61: Revocable Transfer of Assets
Clubbed in the hands of: Transferor who transfers the Assets
Conditions: Clubbing not applicable if:
1. Trust/transfer irrevocable during the lifetime of
beneficiaries/transferee or
2. 2. Transfer made prior to 1-4-1961 and not revocable for a
period of 6 years. Provided the transferor derives no direct
or indirect benefit from such income in either case
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Chapter- 9 Clubbing of Income Part- I
Sec. 64(1)(ii): Salary, Commission, Fees or
Remuneration Paid to Spouse from a
Concern in Which an Individual has a
Substantial* Interest.
Clubbed in the hands of: Spouse whose total income
(excluding income to be clubbed) is greater.
Conditions: Clubbing not applicable if Spouse possesses
technical or professional qualification and remuneration is
solely attributable to application of that knowledge/
qualification
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Chapter- 9 Clubbing of Income Part- I
Sec. 64(1)(iv): Income from Assets
Transferred to Spouse
Clubbed in the hands of: Individual transferring the asset
Conditions: Clubbing not applicable if:
The assets are transferred;
1. With an agreement to live apart.
2. Before marriage.
3. Income earned when relation does not exist.
4. By Karta of HUF gifting co-parcenary property to his wife.
5. Property acquired out of pin money.
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Chapter- 9 Clubbing of Income Part- I
Sec. 64(1)(vi): Income from the Assets
Transferred to Son’s Wife
Clubbed in the hands of: Individual transferring the Asset.
Conditions: The transfer should be without adequate
consideration and the transferee should be the wife of the
transferor’s son at the time of the transfer.
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Chapter- 9 Clubbing of Income Part- I
Sec. 64(1A): Income of a Minor Child [Child Includes
Step Child, Adopted Child and Minor Married
Daughter]
Clubbed in the hands of:
1. If the marriage subsists, in the hands of the parent whose
total income is greater; or;
2. If the marriage does not subsist, in the hands of the person
who maintains the minor child.
Exemption u/s 10(32): The assessee can claim an exemption of
Rs. 1500 or clubbed income, in case of minor’s income clubbed
with the assessee.
Conditions: Clubbing not applicable if
1. Income of a minor child suffering any disability specified
u/s. 80U.
2. Income on account of manual work done by the minor child.
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Chapter- 9 Clubbing of Income Part- I
Sec. 64(2): Income of HUF from Property
Converted by the Individual into HUF
Property
Clubbed in the hands of: Income is included in the hands
of individual & not in the hands of HUF.
Conditions: The gift received by HUF from its member will
not be taxable as income from other sources in the hands of
HUF, however, income arising from such gift shall be taxable
in the hands of such member only who has gifted the
amount or the property.
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Chapter- 9 Clubbing of Income Part- I
End of Chapter- 9
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