TL;DR for CAs
- Income from assets transferred to spouse/minor may be clubbed.
- Exceptions exist for adequate consideration and certain gifts.
- Plan ownership structures before investment, not after notice.
What it is
Sections 60–64 prevent tax avoidance by transferring income-producing assets to family members.
Who it applies to
Individuals transferring assets to spouse, son's wife, or minor child without adequate consideration.
Key provisions
- Clubbing of spouse income from transferred assets
- Minor child income clubbing with exceptions for disabled child / manual work
- Cross-transfers and revocable transfers
Practical tips for CAs
Review demat and property ownership during tax planning meetings. Document gift deeds and consideration.
Common mistakes
Putting investments in spouse's name expecting separate taxation; ignoring clubbing on FD interest.
For general guidance only. Verify with the latest Finance Act, GST notifications, and ICAI guidance notes before advising clients.