Understanding Clubbing of Income: Key Provisions and Scenarios

Clubbing of Income: In India, taxpayers must report all earnings, including those of others under Section 64 of the Income Tax Act. Instances: Spouse's, minor child's, and son's wife's incomes can be clubbed with the taxpayer's income, preventing income diversion.

Provisions: Transferring income or assets without transfer of ownership leads to clubbing, ensuring tax compliance. Exceptions: Income from manual work, specialized skills, or disabilities is exempt from clubbing.

Major Children: Income earned by adult children remains taxable in their hands, not the parents'. HUF Property: Transfers to Hindu Undivided Family require proper consideration to avoid income clubbing.

Compliance: Understanding clubbing provisions ensures adherence to tax laws and fair taxation.