Provisions of Law Regarding Clubbing of Income of Spouse and Other Family Members

Clubbing of income refers to the inclusion of income earned by one person in the income of another person for tax purposes. In the case of spouses and other family members, there are certain provisions under the Income Tax Act that govern the clubbing of their income with that of the individual. These provisions are aimed at preventing the circumvention of tax liability by transferring income to family members who may be in a lower tax bracket.

1. Clubbing of Income of Spouse
Under Section 64 of the Income Tax Act, the following incomes of a spouse are clubbed with the individual's income:
- Income from assets transferred directly or indirectly to the spouse without adequate consideration.
- Income arising from assets transferred by an individual to a person or association of persons for the immediate or deferred benefit of the spouse.
- Income arising from assets transferred by a person to a trust for the immediate or deferred benefit of the spouse.
- Income arising from assets transferred by a person to a trust, where the transferor or the spouse is a potential beneficiary.

2. Clubbing of Income of Other Family Members
Section 64(2) of the Income Tax Act provides for the clubbing of income of certain specified family members, including:
- Minor child: Any income earned by a minor child is clubbed with the income of the parent whose total income is higher, except in cases where the income is generated due to the child's own skill, talent, or specialized knowledge.
- Son's wife: Any income arising to the son's wife from assets transferred directly or indirectly to her by the individual or in which the individual has a direct or indirect interest is clubbed with the individual's income.
- Son's minor child: Any income arising to the son's minor child from assets transferred directly or indirectly to the child by the individual or in which the individual has a direct or indirect interest is clubbed with the individual's income.

Exceptions to Clubbing of Income
There are certain exceptions to the clubbing provisions, which include:
- Income derived from assets transferred before marriage or on the occasion of marriage.
- Income derived from assets transferred under an agreement to live apart.
- Income derived from assets transferred for the benefit of a spouse suffering from a disability specified under the Act.
- Income derived from a partnership firm in which the spouse or family member is a working partner.

Conclusion
The provisions of clubbing of income under the Income Tax Act are designed to prevent tax avoidance by transferring income to family members. By including such income in the individual's taxable income, the Act ensures that the tax liability is calculated based on the combined income of the family unit. However, certain exceptions exist to accommodate genuine transfers and specific circumstances. It is essential to understand these provisions to comply with the tax laws effectively.