Clubbing of Income – Section 99: When Spouse or Minor Child Income Is Added to Yours
- Under section 99, income of your spouse from a concern where you have a substantial interest, and income from assets you transferred without adequate consideration, is added to your income.
- A minor child's income is clubbed too, except income from the child's own work or skill, and where the child has a disability covered by section 154.
- The person in whose name the asset stands can be made to pay the tax attributable to the clubbed income (section 100).
Moving income-earning assets to a family member does not always move the tax. Section 99 of the Income-tax Act, 2025 (old section 64) adds certain income of family members to the income of the individual who transferred the asset or who has an interest in the concern.
What is clubbed
| Income of | Clubbed with your income when |
|---|---|
| Spouse | It is salary, commission, fees or any remuneration from a concern in which you have a substantial interest – but not if the income is solely due to the spouse’s own technical or professional knowledge, experience or qualification |
| Spouse | It arises from assets you transferred to your spouse otherwise than for adequate consideration or under an agreement to live apart (see section 25(a)) |
| Son’s wife | It arises from assets you transferred to her without adequate consideration on or after 1 June 1973 |
| Minor child | All income of the minor child, except income from work done by the child, from activities using the child’s skill, talent or specialised knowledge, or where the child has a disability of the kind in section 154 |
| Any person or association | Income from assets you transferred without adequate consideration, to the extent it is for the immediate or deferred benefit of your spouse or son’s wife |
Examples
- You gift ₹10 lakh to your spouse, who earns interest by investing it. The interest is added to your income.
- If your spouse invests the gift in a business or as capital in a firm, only a proportion of the business income is clubbed – income × (value of the transferred asset invested ÷ total investment) – under section 99(2).
- Your minor daughter earns income as a TV artist using her own talent. That income is hers and is not clubbed.
- Your minor son earns interest on a bank deposit in his name. That interest is clubbed with the income of the parent as the section provides.
Whose income gets the clubbed amount
- Spouse’s remuneration: added to the spouse whose total income before the addition is greater. Once included in one spouse’s income, it is not included in the other’s in later years unless the Assessing Officer is satisfied after hearing them (section 99(5)(a)).
- Minor child: added to the income of the parent whose total income is greater, if the parents are married; if the marriage does not subsist, to the parent who maintains the child (section 99(5)(b)).
- Substantial interest means 20% or more of the voting power in a company, or a right to at least 20% of the profits in any other concern, held by you or by you and your relatives together (section 99(5)(a)(iii)).
Converting your property into HUF property
If you put your own property into the common stock of your HUF, or transfer it to the family without adequate consideration, the income from it continues to be taxed as yours (section 99(3)). If the property is later partitioned and your spouse receives a share, income from that share is clubbed under clause (a). Conversions made on or before 31 December 1969 are outside this rule (section 99(4)).
Who pays the tax (section 100)
If the clubbed income arises from an asset, the person in whose name the asset stands (or a member of the firm) is liable to pay the part of your tax attributable to that income, once the Assessing Officer serves a demand. Joint holders are jointly and severally liable.
Practical tips
- Section 99 names the spouse, the son’s wife, the minor child and (in clause (d)) transfers for their benefit – check the clause that fits your facts before assuming an income is outside it.
- If your spouse works in your business, pay a fair, documented salary based on genuine professional skill.
- Co-owned property is dealt with by section 24 – each co-owner is taxed on their own share.
Still have a question? Ask TAXBADI – get an answer from the Act, Rules and forms, with the exact sections cited.
More guides
- Arrears of Salary – Relief under Section 157, Rule 73 and Form No. 39 (Old 89(1))
- Capital Gains Tax Rates 2026-27 – Shares, Mutual Funds and Property under the New Act
- Filing Income Tax Return Late – Fee under Section 428 and Interest under Sections 423 to 425
- HRA Exemption under the Income-tax Act 2025 – Schedule III Sl. 11 and Rule 279 Explained
This guide is for general information and is not tax advice. Tax figures are before health and education cess unless stated. The law and the official notifications are the final authority – see our Disclaimer. Found a mistake? Tell us.