Planning Beyond the Reach of Clubbing of Income

Is Income from Accumulated Income and Gains from Bonus Shares on Gifted Assets Liable to Clubbing?

- JIGAR MUKESH PATEL

The 'clubbing provisions' under the Income-tax seek to guard against tax-avoidance through the route of gifts to close members of the family such as spouse and son's wife.

Section 64(1) of the Income-tax Act provides that in computing the total income of an individual, the income arising to the spouse or son's wife from assets gifted to them by the individual would be clubbed with the total income of the individual.

Building up Income from Accumulated Income of Gift Assets In the context of the clubbing provisions under Section 64, it is important to note that the income liable for clubbing is such income arising from the amount of the gifted asset liable for clubbing.