Income tax in India is levied on a person’s total income, but in certain cases, income of another person (such as a spouse or child) may be clubbed with the taxpayer’s income. This is to prevent tax avoidance through smart but misleading transfers within family. Two such powerful anti-avoidance tools under the Income Tax Act are:

Section 64(1) – Clubbing of income of spouse, daughter-in-law, and others.
Section 64(1A) – Clubbing of income of minor children.

These provisions ensure that the income remains taxable in the hands of the actual beneficial owner, even if shown under someone else’s name.

Cases Where Income is Clubbed:
Person Condition Taxable In Whose Hands Spouse If salary, commission, fees, or
income arises from a concern The spouse having
in which the other spouse has substantial interest
substantial interest Spouse If asset is transferred directly or
indirectly without adequate Transferor
consideration spouse Son’s Wife If an asset is transferred
(Daughter-in-law) without adequate consideration Transferor Any Person If an individual transfers an asset
for the benefit of their spouse or Transferor
son’s wife

Section 64(1A): Clubbing of Minor Child’s Income
This section deals with clubbing of a minor child’s income in the hands of either parent. The objective is to prevent tax-saving tactics using children’s identity.
Conditions:
Minor’s income is clubbed with the parent whose income is higher.
Applies to both natural and adopted children.

Exemptions: Income earned by minor child from:
Manual work (e.g., acting, modeling, sports, art)
Skill, talent, specialized knowledge
Child suffering from disability under Section 80U

Exemption Limit:
₹1,500 per child is exempt from clubbing.
Applies to each minor child separately.

📌 Example : Minor’s Interest Income
Mr. and Mrs. Kapoor’s 12-year-old daughter Ananya earns ₹20,000 as interest from a bank deposit made in her name.
➡️ Result: Since it’s not from manual work or skill, it will be clubbed in Mrs. Kapoor’s income (assuming she has higher income).
She can claim ₹1,500 exemption, so ₹18,500 will be taxable.