CLUBBING OF INCOME

CLUBBING OF INCOME
TRANSFER OF CLUBBING OF INCOME FROM ASSETS
INCOME WITHOUT INCOME TRANSFERRED TO A
TRANSFER OF PERSON FOR THE
ASSET (SECTION. BENEFIT OF SPOUSE
60) INCOME FROM [SEC. 64 (1) VII)]
ASSETS
TRANSFERRED TO
REVOCABLE SON’S WIFE [SEC. INCOME FROM ASSETS
TRANSFER OF 64 (1) (VI)] TRANSFERRED TO A
ASSETS (SECTION
PERSON FOR THE
61)
INCOME FROM ASSETS BENEFIT OF SON’S WIFE
TRANSFERRED TO A [SEC. 64 (1) (VIII)
PERSON FOR THE
INCOME OF SPOUSE BENEFIT OFSPOUSE
[SEC. 64 (1) VII)]
REMUNERATION FROM A INCOME OF MINOR
INCOME FROM ASSETS CONCERN IN WHICH CHILD (SEC. 64 (1A)
TRANSFERRED TO SPOUSE SPOUSE HAS
[SECTION 64(1) (IV)] SUBSTANTIAL INTEREST
[SECTION 64 (1) (ii)]
 CLUBBING OF INCOME
SECTION NATURE OF CLUBBED IN CONDITIONS / RELEVANT REFERENCE
TRANSACTION THE EXCEPTIONS
HANDS OF
Transfer of Transferor Irrespective of: •Income for the purpose of Section 64
Income who •Whether such transfer is includes losses.
without transfers revocable or not. •Section 60 does not apply if corpus itself
transfer of the income. •Whether the transfer is is transferred.
60 Assets. effected before or after the
commencement of IT Act.

Revocable Transferor Clubbing not applicable if: Transfer held as revocable:

transfer of who •Trust/transfer irrevocable
Assets. transfers during the lifetime of
the Assets. beneficiaries/ transferee
•Transfer made prior to 1-4-
1961 and not revocable for a
61 period of 6 years. Provided
the transferor derives no
direct or indirect benefit from
such income in either case.
•If there is provision to re transfer
directly or indirectly whole/part of
income/asset to transferor;
•If there is a right to reassume power,
directly or indirectly, the transfer is held
revocable and actual exercise is not
necessary.
•Where no absolute right is given to
transferee and asset can revert to
transferor in prescribed circumstances,
transfer is held revocable.
 CLUBBING OF INCOME
SECTION NATURE OF CLUBBED IN CONDITIONS / RELEVANT REFERENCE
TRANSACTION THE EXCEPTIONS
HANDS OF
Salary, Spouse Clubbing not applicable if: •The relationship of husband and
Commission, Fees whose total Spouse possesses technical wife must subsist at the time of
or remuneration income accrual of the income.
paid to spouse or professional qualification
(excluding and remuneration is solely •Income other than salary,
from a concern in income to commission, fees or remuneration
64(1)(ii) which an individual attributable to application of
be clubbed) is not clubbed under this clause
has a substantial* is greater. that
interest. knowledge/qualification.

Income from assets Individual Clubbing not applicable if: •Income earned out of Income
transferred directly transferring The assets are transferred; arising from transferred assets not
or indirectly to the the asset. •With an agreement to live liable for clubbed.
apart.
spouse without •Cash gifted to spouse and he/she
adequate •Before marriage. invests to earn interest.
consideration. •Income earned when •Capital gain on sale of property
relation does not exist. which was received without
64(1)(iv)
• By Karta of HUF gifting co- consideration from spouse
parcenary property to his
wife. •Transaction must be real.
•Property acquired out of pin
money.
 CLUBBING OF INCOME
SECTION NATURE OF CLUBBED IN CONDITIONS / RELEVANT REFERENCE
TRANSACTION THE EXCEPTIONS
HANDS OF

Income from the Individual Condition: Cross transfers are also covered
assets transferred transferring The transfer should be
to son’s wife. the Asset. without adequate
consideration.
64(1)(vi)

Transfer of assets Individual Condition: •Transferor need not necessarily

by an individual to transferring The transfer should be have taxable income of his own.
a person or AOP for the Asset. without adequate
the immediate or •Wife means legally wedded wife.
consideration.
deferred benefit of
his:
64(1) (vii) - Spouse.
(vii), (viii) - Son’s wife.
(viii)
 CLUBBING OF INCOME
SECTION NATURE OF CLUBBED IN THE CONDITIONS / RELEVANT REFERENCE
TRANSACTION HANDS OF EXCEPTIONS

Income of a minor •If the marriage subsists, in Clubbing not •Income out of property
child [Child the hands of the parent applicable for: transferred for no
includes step whose total income is Income of a minor consideration to a minor
child, adopted greater; or; child suffering any married daughter, shall
child and minor •If the marriage does not disability specified u/s. not be clubbed in the
married subsist, in the hands of the 80U. parents’ hands. [Section
daughter]. person who maintains the 27]
minor child. •Income on account of
•Income once included in manual work done by •The parent in whose
the total income of either of the minor child. hands the minor’s income
parents, it shall continue to is clubbed is entitled to an
64(1A) be included in the hands of exemption up to Rs. 1,500
same parent in the •Income on account of
per child. [Section 10(32)]
subsequent year unless AO any activity involving
is satisfied that it is application of skills,
necessary to do so (after talent or specialized
giving that parent knowledge and
opportunity of being heard) experience.
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