Still working...

Clubbing Of Income

Clubbing of income is a term used in taxation to describe the inclusion of income earned by one person in the tax return of another person. This typically occurs when income is transferred or diverted from one person to another in order to reduce the tax liability of the person who earned the income.

For example, if a person transfers income from their business or profession to their spouse or minor child with the intention of reducing their own tax liability, the income earned by the spouse or minor child will be “clubbed” or added to the income of the person who transferred the income.

Clubbing of income provisions are designed to prevent taxpayers from evading taxes by transferring or diverting their income to others. These provisions vary by country and are typically applied to certain types of income, such as income from business or profession, income from investments, or income from property.

It is important to note that clubbing of income rules can be complex and can have significant tax implications for both the person who transferred the income and the person who received it. It is recommended to consult with a tax professional for specific advice on how clubbing of income rules may apply to your situation.

Recommended Posts