Section 99 — Spouse Minor Child HUF Clubbing | ITA 2025

Section 99 — SPOUSE / MINOR CHILD / HUF CLUBBING (KEY ANTI-AVOIDANCE)

Section 99 is the substantive equivalent of 1961 ss. 64-65 — the core SPOUSE / MINOR CHILD / HUF clubbing regime. Sub-section (1) — clubs the income of spouse / minor child / son's wife / etc. with the individual's income in specified scenarios. Sub-section (3) — clubs HUF income of converted self-acquired-property after 31-Dec-1969. Coverage includes: spouse-from-substantial-interest concern; spouse-from-asset-transfer-without-adequate-consideration; minor-child income (with carve-outs for child's earnings from skill / manual work); ₹ 1,500 per child exemption.

Statutory text — Income-tax Act, 2025

Marginal note — Income of individual to include income of spouse, minor child, etc.

(1) The total income of any individual, for a tax year, shall include the income arising directly or indirectly,—

(a) to the spouse of such individual,—

(i) by way of salary, commission, fees or any other form of remu- neration, whether in cash or kind, from a concern in which such individual has a substantial interest but shall not include income solely attributable to the application of technical or professional knowledge, experience and technical or professional qualification of the spouse;

(ii) from assets transferred directly or indirectly to him or her by such individual otherwise than for adequate consideration or in connec- tion with an agreement to live apart, subject to the provisions of section 25(a);

(b) to the son’s wife of such individual from assets transferred directly or indirectly on or after the 1st June, 1973, to her by such individual, oth- erwise than for adequate consideration;

(c) to the minor child of the such individual, but shall not include income accruing or arising—

(i) on account of work done by such child; or

(ii) from activities where his skill, talent, specialised knowledge or experience is applied; or

(iii) where such minor child is suffering from disability of the nature specified in section 154;

(d) to any person or association of persons from assets transferred directly or indirectly, otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse or his son’s wife, as the case may be, other than the assets transferred before 1st June 1973, to the extent to which the income from such assets is for the immediate or deferred benefit of his son’s wife.

(2) If the asset transferred under 11[sub-section (1)(a)(ii) or (b)] is invested by the spouse or son’s wife, in any business or in the nature of capital contributed as a

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 99	INCOME-TAX ACT, 1961
Spouse-remuneration from substantial-interest concern	1961 s. 64(1)(ii)
Spouse-income from assets transferred without adequate consideration	1961 s. 64(1)(iv)
Son's-wife income from assets transferred (post-1973)	1961 s. 64(1)(vi)/(vii)
Trust for spouse / son's wife — income clubbed	1961 s. 64(1)(viii)
Minor-child income (₹ 1,500 per child carve-out)	1961 s. 64(1A) read with proviso
Skill / manual-work income of minor — exception	1961 s. 64(1A) proviso
s. 99(3) — HUF self-acquired-property converted post-31-Dec-1969	1961 s. 64(2) read with s. 65

STATUTORY ARCHITECTURE

Section 99 is one of the LONGEST anti-avoidance provisions in the Act, capturing five distinct family-clubbing scenarios: (I) SPOUSE-REMUNERATION (sub-s. 1(a)(i)): Spouse's salary / commission / fees from a concern in which the assessee has SUBSTANTIAL INTEREST is clubbed — UNLESS spouse's income is solely attributable to genuine technical / professional knowledge. (II) SPOUSE-INCOME-FROM-TRANSFERRED-ASSET (sub-s. 1(a)(ii)): Income from assets transferred by assessee to spouse OTHERWISE THAN FOR ADEQUATE CONSIDERATION is clubbed in assessee's hands. (III) SON'S-WIFE INCOME (sub-s. 1(c)): Similar treatment for son's-wife — assets transferred without adequate consideration → income clubbed. (IV) MINOR CHILD INCOME (sub-s. 1(d)): Income of minor child (other than physically/mentally disabled minor) clubbed in higher-earning parent's hands. ₹ 1,500 per minor child exemption (FA 2003 onwards). Skill/talent earnings of minor (e.g., child actor, sportsperson) NOT clubbed. (V) HUF SELF-ACQUIRED PROPERTY (sub-s. 3): Self-acquired property converted into HUF property post-31-Dec-1969 — income still clubbed in individual's hands.

CASE LAW

Batta Kalyani v. CIT (AP HC) — 'substantial interest' = 20%+ ownership; computed at any point during the year. CIT v. C.M. Kothari (SC) — assets gifted to spouse who then invests = income clubbed; CHAIN-OF-TRANSFERS doctrine applied. Bhau Lal v. CIT (Del HC) — proceeds of sale of clubbed-asset and re-investment income are CONTINUOUSLY clubbed. CIT v. Smt. Pelleti Sridevamma (AP HC) — minor's income from professional / artistic skill (e.g., child actor, painter) NOT clubbed.

PLANNING NOTES

(i) For spouse-remuneration in promoter's company, ensure spouse's TECHNICAL / PROFESSIONAL qualification is documented (degree, training, prior experience); otherwise s. 99(1)(a)(i) clubbing applies. (ii) For spouse / son's wife asset-transfers, ALWAYS take ADEQUATE CONSIDERATION (FMV-based) — even minor under-valuation invokes clubbing. (iii) Minor child fixed-deposit interest, dividend, mutual-fund distributions — all clubbed (₹ 1,500 per child exemption is minimal). (iv) For HUF planning, individual conversions of self-acquired property post-1-Jan-1970 are CAUGHT — historical conversions (pre-1-Jan-1970) are safe. (v) For chain-of-transfers (gift to spouse, who gifts to minor), C.M. Kothari ratio applies — clubbing follows the substance regardless of intermediate transactions.

CROSS-REFERENCES

Section 96 / 97 / 98 — Transfer-based clubbing framework.
Section 100 — Liability of person whose income is clubbed.
Section 92(2) — Gifts received-by-individual carve-out (relative-test).
Income-tax Rules, 2026 — minor disability certification.

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