Invest Household Savings in PPF, SSY: Clubbing Rule Sec 64

Section 64, IT Act

This section specifies the cases where one person's income can be clubbed with another for taxation purposes.

Where Does it Apply?

Clubbing provisions apply when an individual transfers assets to their spouse or child, and the transferor directly or indirectly receives income from that asset.

Cases to Consider

The husband gifted a house to his wife, and she is earning rent from it. Rental income will be clubbed with the husband’s income and taxed.

1.

Cases to Consider

A father transfers shares to his minor child and reinvests the dividends; the income will be clubbed with the father for taxation.

2.

Exemption Allowed

The parent in whose hands the minor’s income is clubbed is allowed an exemption upto Rs. 1,500 per child u/s 10(32) of the IT Act.

1.

Exemption Allowed

Interest derived from PPF, SSY, etc., are also exempted, and no clubbing provisions would apply to the same.

2.