Clubbing of Income

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Clubbing of Income for NRIs – N.D. Savla & Associates

For Non-Resident Indians (NRIs), Indian tax laws may require certain incomes to be combined with the income of relatives in India. This is known as clubbing of income. It typically applies in cases where an NRI transfers assets or income to a spouse, minor child, or other family member. At N.D. Savla & Associates, we provide expert advisory on clubbing provisions for NRIs, ensuring accurate tax filing and avoidance of unnecessary tax exposure.

Overview

Under the Income Tax Act, if an NRI gifts money or property to specified relatives, the income generated from those assets may be clubbed with the relative’s income in India and taxed in their hands. For example, interest earned on a fixed deposit gifted to a spouse may be taxed as the spouse’s income. Understanding these rules is critical to avoid double taxation or incorrect tax filings.

Features

  • Advisory on clubbing provisions applicable to NRIs

  • Identification of transactions that may trigger clubbing (spouse, minor children, daughter-in-law)

  • Tax planning to reduce clubbing impact through exemptions and structuring

  • Compliance support for NRI gifts and transfers under FEMA

  • Guidance on reporting clubbed income in Indian tax returns

  • Assistance with DTAA benefits where applicable

Documents Required

  • Passport & PAN card

  • Gift deed / transfer documentation

  • Bank statements (NRO/NRE)

  • Investment documents (FD receipts, share certificates, property papers)

  • Proof of relationship (spouse, children, dependents)

  • Income details of transferee (relative in India)

Procedure

  • Transaction Review – Identify transfers made by the NRI to relatives in India.

  • Applicability Check – Determine if the transfer attracts clubbing under the Income Tax Act.

  • Tax Computation – Calculate the income generated from such transfers.

  • Clubbing Adjustment – Include the income in the tax return of the transferee relative.

  • Compliance Filing – File the Indian ITR reflecting correct clubbing provisions.

  • Advisory & Planning – Suggest legal structuring to minimize tax exposure in future.

Why This Matters

Many NRIs unintentionally trigger clubbing of income rules when transferring funds or assets to family members in India. This can result in higher tax liabilities, compliance issues, or scrutiny from tax authorities. With N.D. Savla & Associates, your NRI clubbing of income compliance is handled with accuracy, transparency, and proper tax planning.