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Joint Ownership Of House Property: Does It Make The Income Of A Husband, Wife, And Children Liable To Be Clubbed Together In Case Of NRI?

[How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children]

A non-resident Indian is not liable to pay income tax on the full income from any property jointly owned by him with his wife. The only precaution that he should take is that there is no gift made by him to his wife, If this precaution is taken, the joint ownership of movable as well as immovable assets will entitle each of the owner to claim separate income tax assessment in his or her hands independently. Thus, a nonIndian resident could own shares of a limited company out of money belonging to him as well as out of separate funds belonging to his wife as also the funds of a major child. Thus, if the shares in a limited company are owned in three names with the funds contributed by the three persons as mentioned earlier, each of the persons would be liable to be taxed separately and not be clubbed together. In particular, this provision is recognised for the purpose of joint ownership of house property. Thus, it is provided in Section 26 that where property consisting of building or buildings and lands appertaining thereto is owned by two or more than two persons and their respective shares are definite and ascertainable, such persons in respect of such property are not to be assessed as an association of persons, but the share of each person in the income from the property would be included in his total income separately. In the case of other investment, like shares, debentures, etc., there is sometimes a risk of joint investment being considered as the investment of ‘an association of persons. In the interest of avoiding confusion and clubbing of income, a non-resident Indian should not make joint investments for movable assets. But as regards immovable house property, because of the clear cut provision contained in Section 26 there is no risk if it is purchased out of separate and independent funds belonging to the husband, wife and the major children, namely, all of them together, and it would not be liable to be clubbed. Rather, the income of each co-owner would be liable to separate assessment independently. This aspect of tax planning can be taken care of while purchasing house property, particularly where the house property is big and saving of income tax and wealth tax becomes important.

How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children !
1. Income From Joint Accounts Or Joint Investments by NRI : Is it Liable To Be Clubbed For Tax Purposes in case of NRI ?
2. When is the income of wife liable to be clubbed with the income of her husband, and vice versa ? in case of NRI
3. When is the income of a Minor Child liable to be Clubbed with that of a Parent in case of NRI ?
4. When is the Income of Daughter-In-Law Liable to be Clubbed with that of her Father-In-Law or Mother- In-Law in case of NRI ?
5. Income of a Major Child cannot be Clubbed with that of his Parent in case of NRI
6. When is the Income Of An HUF From Self-Converted Assets Liable To Be Clubbed In The Members’ Hands in case of NRI ?
7. When is income from Assets Received on Partial Partition of an HUF liable to be Clubbed with the Income of the HUF in case of NRI ?
8. Joint Ownership Of House Property: Does It Make The Income Of A Husband, Wife, And Children Liable To Be Clubbed Together in case of NRI?
9.  How To Avoid Clubbing Of The Wife’s Wealth With That Of The Husband’s In Case Of NRI
10. Gift From Non-Relatives Now Taxed As Income In Case Of NRI

More... Topics !..


Tax Guide for NRI - Tax Planning, Tax Saving, Investment Guidance for Non-Resident Indians !

1. Basic Aspects Of Tax Planning For NRIs
2. How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children
3. The Incomes of an NRI completely Exempt from Income Tax
4. Capital Gain of an NRI could be Completely Exempt from Income Tax
5. Items completely Exempt from Wealth Tax for an NRI
6. Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
7. Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
8. Procedure for the Filing of Income Tax and Wealth Tax Returns, Assessment, and Refunds
9. Gifts by NRIs to Relatives and Friends can be made fully Exempt from Gift Tax
10. FEMA and NRIs Preliminary Aspects Analysed
11. Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
12. Permissible and Prohibited Current Account Transactions in Case of NRI
13. Investment In Shares, Securities, Units And Other Activities, etc. by an NRI in India
14. Deposits in India by an NRI
15. RFC account of a Returning NRI and Investment Abroad
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