Situation when Income of Wife is clubbed with income of Husband.

By proper planning you can file separate income tax return of both Husband and Wife. Under the income tax act husband and wife would be entitled to have separate income tax return, but in certain situations income of wife is clubbed with husband’s income.

Section 64 of income tax act 1961 clearly defines the following income earned Directly or indirectly will be clubbed with income of husband:

  1. If husband have substantial interest in a company or a firm and wife earns salary, commission, fees or any other form of remuneration from such Company/Firm, Clubbing not applicable if: Spouse possesses technical or professional qualification and remuneration is solely attributable to application of that knowledge/ qualification.
  2. If Husband transfer an asset to her wife directly or indirectly without receiving adequate consideration (does   not include where asset is transferred as part of a divorce settlement)
  3. Husband transfers an asset to a person or an association of persons, directly or indirectly, without adequate consideration, so that the benefit arises to her wife either now or on a deferred basis,

A proper tax planning is required to ignore clubbing of income. It is very common in our practical life when husband transfer his income to wife and file separate ITR without knowing the provisions and after a certain period when he gets securitized by income tax department his income is clubbed with wife’s income. He paid interest and penalty for this poor tax planning.

Keep reading! And reach out to us if you have any queries and you are looking for an CA in Gurgaon, Faridabad, Delhi for further clarification.


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