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CMA Intermediate · Direct and Indirect Taxation · Clubbing of Income

Mr. Kapoor, a salaried person with Rs 8,00,000 of taxable salary, transferred a self-owned let-out house to his wife for no consideration. During the year the wife received rent of Rs 2,40,000, paid municipal taxes of Rs 20,000, and earned Rs 50,000 interest on her own savings. Ignoring interest on borrowed capital, what is Mr. Kapoor's total income after clubbing?

Rs 9,54,000. House property income of Rs 1,54,000 (rent less municipal taxes, less 30% deduction) is clubbed with the husband because he transferred the house without consideration. Salary of Rs 8,00,000 is added, and the wife's own interest is excluded.

  1. ARs 9,54,000Correct
  2. BRs 9,68,000
  3. CRs 10,04,000
  4. DRs 10,20,000

Explanation

Income from a house transferred to the spouse without adequate consideration is clubbed with the transferor. Net annual value = 2,40,000 - 20,000 = 2,20,000; 30% deduction = 66,000; house income = 1,54,000. Total = 8,00,000 + 1,54,000 = 9,54,000. The wife's Rs 50,000 own interest is not clubbed. Rs 9,68,000 computes the 30% on gross rent, ignoring municipal taxes.

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