Scribd Logo
Upload

Welcome to Scribd!

  • 59 views

    Clubbing of Income

    Uploaded by

    Noopur Bhandari
    Income from investments made by a person in the name of their spouse or minor child is added to the total income of the original investor and taxed accordingly under the rules of clubbing of income. For example, interest earned on a fixed deposit invested by a husband in his wife's name will be clubbed back into the husband's income for tax purposes. However, income earned from previously clubbed income, such as interest earned on interest, is not subject to further clubbing and is taxed separately.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd

    Clubbing of Income

    Uploaded by

    Noopur Bhandari
    59 views2 pages
    Income from investments made by a person in the name of their spouse or minor child is added to the total income of the original investor and taxed accordingly under the rules of clubbing of income. For example, interest earned on a fixed deposit invested by a husband in his wife's name will be clubbed back into the husband's income for tax purposes. However, income earned from previously clubbed income, such as interest earned on interest, is not subject to further clubbing and is taxed separately.

    Original Description:

    S

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Income from investments made by a person in the name of their spouse or minor child is added to the total income of the original investor and taxed accordingly under the rules of clubbing of income. For example, interest earned on a fixed deposit invested by a husband in his wife's name will be clubbed back into the husband's income for tax purposes. However, income earned from previously clubbed income, such as interest earned on interest, is not subject to further clubbing and is taxed separately.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views2 pages

    Clubbing of Income

    Uploaded by

    Noopur Bhandari
    Income from investments made by a person in the name of their spouse or minor child is added to the total income of the original investor and taxed accordingly under the rules of clubbing of income. For example, interest earned on a fixed deposit invested by a husband in his wife's name will be clubbed back into the husband's income for tax purposes. However, income earned from previously clubbed income, such as interest earned on interest, is not subject to further clubbing and is taxed separately.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Clubbing of income means Income of other person included in assessees total income, for example: 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. Under the Income Tax Act a person has to pay taxes on his income. A person cannot transfer his income or an asset which is his one of source of his income to some other person or in other words we can say that a person cannot divert his income to any other person and says that it is not his income. If he do so the income shown to be earned by any other person is included in the assessees total income and the assessee has to pay tax on it. I have invested some money in Fixed Deposit in the name of my wife as she is not earning any income. Will she have to pay tax on this? This is an innocent questions because of inadequate knowledge of Tax Provisions on Clubbing of Income and how it attracts tax liabilities. Let us see some Must know tax rules for Clubbing of Income. Top rules of Clubbing of Income

    Income of a minor child is added to husband or Wifes Income depending on whose total income is greater. So if Child earns Rs. 1 Lacs and Wife is earning 5 lacs and Husband is earning 4 lacs, then the income of Child will be added to Wifes Income and it will be 6 lacs of income for Wife and it will be taxed accordingly. Do you think you can live with 90% of your Salary? If you invest money in your Minor Childs or Spouses name then all the income earned from that investment will be clubbed into your own income. The main thing to note here is who ever is the original owner of money will be taxed on the income.

    Exception: Income of a minor child shall not be clubbed and is taxable if the child is suffering from a disability (under Section 80U) such as physical disability, complete blindness or if he earns the income through manual work or any activity involving application of his skills or talent or if both his parents are not alive.

    The compounded income is not subject to clubbing. Which means that the income arising from the income which is clubbed is not clubbed. So, if Ajay invests 30 Lacs in an FD in his Wifes Name, suppose the Interest on this FD comes earns Rs. 2.4 Lacs and the interest from this FD will be included in Ajays income, but any income which comes from this interest of 2.4 lacs will be considered as his

    Wifes income and not Ajays income and hence will not be clubbed back to Ajays income. So if his Wife uses this Rs. 2.4 lacs and makes an income of 1 lacs from it, then this 1 Lac will not be considered in Ajays income.

    You might also like