What are the provisions of clubbing?

The clubbing provision applies to Income and loss both. Capital gain on further transfer of the asset by the transferee will be considered as income and it shall be clubbed in the income of transferor. The income derived from the converted form of asset shall be clubbed in the hands of transferor.

What is clubbing provision in income tax?

When income of other person is included in your income and taxed in your hands, then such situation is called Clubbing of Income. The income clubbed in your income is called deemed income. The provisions of clubbing of income are applicable only on individuals and no other type of assessee like firm/HUF/Company etc.

What are the provisions regarding clubbing of income of spouse?

​​​​​As per section 64(1)(iv), if an individual transfers (directly or indirectly) his/her asset (other than house property) to his or her spouse otherwise than for adequate consideration, then income from such asset will be clubbed with the income of the individual (i.e., transferor).

What is meant by clubbing of income?

According to the stipulations of the Income Tax Act, a person has to pay taxes on all taxable income earned during a financial year. At the time of computing the Gross Total Income, if the income of any other person in a family is included, then the inclusion is called ‘Clubbing of Income’.

Why clubbing provisions have been incorporated in the Act?

So to counteract such practices of tax avoidance, necessary provisions have been incorporated in sections 60 to 64 of the Income Tax Act Hence, a person is liable to pay tax on his own income as well as income belonging to others on fulfillment of certain conditions.

What does clubbing mean in medical terms?

Clubbing. Clubbing is changes in the areas under and around the toenails and fingernails that occur with some disorders. The nails also show changes. Clubbing may result from chronic low blood-oxygen levels. This can be seen with cystic fibrosis, congenital cyanotic heart disease, and several other diseases.

How is income of minor child being clubbed?

Clubbing income of a minor child Any income earned by a minor child during the financial year should be clubbed in income of the parent and taxed accordingly. In case both the parents are earning, the income of a minor child should be clubbed in the income of the parent whose total income is greater.

When transfer of income is clubbed When there is no transfer of assets?

If a person only transfers his income to some other person but doesn’t transfer the asset, Income will always be clubbed in the hands of transferor i.e. Person owning the asset.

What are the provisions of clubbing of income in respect of the income of minor child?

Exemption under Section 10(32) in case of Clubbing of Income of a Minor Child – Where the income of an individual also contains the income of his/her minor child in terms of section 64(1A) of the Income Tax Act, such individual shall be entitled to an exemption of Rupees 1,500 in respect of each minor child.

What is clubbing of negative income?

If property has been transferred to spouse or son’s wife directly or indirectly for a consideration which is inadequate, then only the part of income which is referable to transfer for inadequate consideration, shall be clubbed.

Is clubbing of income applicable for parents?

Any income earned by a minor child during the financial year should be clubbed in income of the parent and taxed accordingly. In case both the parents are earning, the income of a minor child should be clubbed in the income of the parent whose total income is greater.

What are the provisions of clubbing of income in respect of income of minor child?

What is the clubbing provision in income tax?

The reason for introducing clubbing provision is to curb the wrong practice of tax evasions. However, if all the conditions mentioned are satisfied, then the clubbing shall be done irrespective the intention is not to evade tax. Clubbing provision are covered under Section 64 of the Income Tax Act, 1961.

What is the reason for introducing clubbing provision in GST?

The reason for introducing clubbing provision is to curb the wrong practice of tax evasions. However, if all the conditions mentioned are satisfied, then the clubbing shall be done irrespective the intention is not to evade tax.

Is interest received on transfer of assets subject to clubbing provision?

The remaining interest shall be the income of the wife as it is received on the transfer of asset with adequate consideration and shall not be falls under clubbing provision.

What is an example of clubbing of income?

For example, if a husband transfers some of the income on his wife name to reduce his personal tax burden. Then in such cases, clubbing provision will apply and such transferred income shall be added back into the husband income for computing taxable income.