Appuonline - Regulation

Contents
1	Clubbing the income of spouse & minor child
2	If the parents are divorced or legally separated, in whose hands is the income of their minor-child to be included?
3	If in any subsequent year the income of the other parent becomes greater, will the income of the minor-child continue to be assessed in the hands it was first assessed?
4	If the assets are bought by the minor child our of gifts received on his birthday, is their income to be clubbed in the hands of his parents?
5	Is there an exemption limit for clubbing of minor child's income in the hands of an individual?
6	Clubbing of other incomes
7	Is income from 'shares' bought by an individual out of his own funds but invested in the name of his wife, to be taxed in his hands?

CLUBBING THE INCOME OF SPOUSE & MINOR CHILD
A Salary-earner (and other individual tax payers too) generally do not include specified income of their spouses and minor-children, while filing their own income-tax returns.

Starting from Assessment Year 1993-94 all incomes arising or accruing to minor children are to be included in the total income of that parent whose total income (before such inclusion) is greater. The word used is 'all income' but any income arising to the minor child as a result of some manual-work done by him or from such activity involving application of his skill, talent or specialised knowledge and experience is not to be included in the hands of the parents. For example, income of a child actor or singer derived from acting or singing is not covered by this clubbing provision.

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IF THE PARENTS ARE DIVORCED OR LEGALLY SEPARATED, IN WHOSE HANDS IS THE INCOME OF THEIR MINOR-CHILD TO BE INCLUDED?
In such cases, the income arising to the minor-child will be assessed in the hands of that parent who maintains the minor-child in that year.

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IF IN ANY SUBSEQUENT YEAR THE INCOME OF THE OTHER PARENT BECOMES GREATER, WILL THE INCOME OF THE MINOR-CHILD CONTINUE TO BE ASSESSED IN THE HANDS IT WAS FIRST ASSESSED?
No. It has to be assessed in the hands of the parent whose total income is greater. However, his Assessing Officer has to first give him/her a notice informing him/her that for that year the minor-child's income has

to be included in his/her hands as he/she has greater
total income than his/her spouse.

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IF THE ASSETS ARE BOUGHT BY THE MINOR CHILD OUR OF GIFTS RECEIVED ON HIS BIRTHDAY, IS THEIR INCOME TO BE CLUBBED IN THE HANDS OF HIS PARENTS?
Yes. The law requires it.

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IS THERE AN EXEMPTION LIMIT FOR CLUBBING OF MINOR CHILD'S INCOME IN THE HANDS OF AN INDIVIDUAL?
Yes. The exemption limit is Rs.1500 per child in a year.

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CLUBBING OF OTHER INCOMES
Besides clubbing of income of minor-children in the hands of the parent, certain other incomes are also liable to be clubbed in the hands of the individual in the following circumstances:-

When the income arises to the spouse of such individual from assets transferred directly or indirectly to the spouse by the individual for inadequate consideration.
When the income arises to the son's wife from assets, transferred after 1st June 1973, to the son's wife by the individual for inadequate consideration.
When income arises to the son's wife from assets transferred, for inadequate consideration, by the individual to such person for the benefit of the individual's wife or son's wife.

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IS INCOME FROM 'SHARES' BOUGHT BY AN INDIVIDUAL OUT OF HIS OWN FUNDS BUT INVESTED IN THE NAME OF HIS WIFE, TO BE TAXED IN HIS HANDS?
Yes. Certainly, if the funds were transferred for inadequate consideration.

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