Clubbing Of income Flashcards
Who is the income of a minor child taxable in?
The parent whose income is more before clubbing minor’s income.
In which cases is a minor child’s income taxable in the hands of the minor only?
- Income is due to manual work
- Income is due to skill & talent
- Minor child suffering from disability
What exemption is allowed to the parent if a minor child’s income is clubbed?
Exemption u/s 10(32) of ₹1500 p.a. per child.
Once minor’s income is clubbed with one parent, can it be clubbed with the other parent in the future?
Yes, but the Assessing Officer must give an opportunity to be heard.
If the marriage of the parents does not subsist, whose income includes the minor’s?
The income of the parent who maintains the minor child in the relevant previous year.
Do clubbing provisions apply to income of a minor married daughter?
Yes.
What does ‘child’ include in relation to an individual?
- Step-child
- Adopted child
What happens if an individual transfers an asset to their spouse without consideration?
Income from such asset is received by spouse but tax on such income is paid by transferor.
What is a condition for the provision regarding asset transfer to spouse to apply?
The relationship of husband & wife must exist at the time of transfer and at the time of generating the income.
Is the provision applicable if the asset is transferred in connection with an agreement to live apart?
No.
What is the status of an individual who transfers house property to their spouse or minor child?
Treated as Deemed owner as per sec 27.
What happens if an individual transfers an asset to their son’s wife without consideration?
Income from such asset is received by son’s wife but tax on such asset is paid by transferor.
What relationship must exist for the provision regarding asset transfer to son’s wife to apply?
The relationship of mother/father-in-law & daughter-in-law must exist at the time of transfer and at the time of generating the income.
What happens if an individual transfers an asset for the benefit of their spouse or son’s wife?
Income from such asset is received by the transferee, but tax on such income is paid by the transferor.
Under which conditions is the income of a spouse taxable in the hands of the assessee?
- Income should be in the nature of salary, commission, bonus (remuneration)
- Such remuneration should be received from a concern where the assessee has substantial interest.
What percentage of shareholding indicates substantial interest in a company?
20% or more shareholding.
What is the definition of substantial interest for a Firm/AOP/BOI?
20% or more Profit Sharing Ratio (PSR).
What is an exception to the taxation of spouse’s income?
If remuneration is received due to technical & professional qualification and attributed to such qualification.
When both spouses have substantial interest and receive income, how is it taxed?
Income is includible in the hands of the spouse whose total income, excluding such income, is higher.
What is the rule regarding income included in the total income of either spouse for subsequent years?
Income arising in the succeeding year shall not be included in the total income of the other spouse unless the AO is satisfied after hearing that it is necessary.
What does Sec 60 state about income transfer without asset transfer?
Such income is taxable in the hands of the transferor.
What happens in the case of a revocable transfer of asset according to Sec 61?
Income is received by transferee but tax is paid by transferor.
What is the exception for revocable transfers after the death of the beneficiary?
The provision regarding tax payment by the transferor is not applicable.
