Clubbing Of Spouse And Minor Child Income: Old Section 64 Is Now Section 99

Section 64 is the section every practicing CA already knows by heart. It is the one that catches the classic "let me put it in my wife's name" or "let me open an account for my kid" moves. Under the new Act, the rule has not softened at all. It has simply moved.

Old law: Section 64, Income Tax Act, 1961

New law: Section 99, Income Tax Act, 2025, effective 1 April 2026, applicable from AY 2026-27

What the Section Says

Section 64 (old) and Section 99 (new) is the main clubbing provision. It pulls another person's income into your total income in specific, defined situations. The two situations that come up most often in practice are spouse clubbing and minor child clubbing.

Spouse clubbing applies in three scenarios:

1. Your spouse earns salary, commission, or fees from a business or company where you hold a substantial interest, meaning 20 percent or more of voting power or profit share, and your spouse does not have the professional qualification needed for that role
2. Income arises from an asset you transferred to your spouse without adequate consideration, meaning you gave it away or sold it below fair value
3. Income arises indirectly through an arrangement designed to route income to your spouse while you retain the real benefit

Minor child clubbing works differently. All income earned by a minor child, other than income from the child's own skill, talent, manual work, or specialised knowledge, gets added to the income of whichever parent earns more. A separate exemption of up to Rs. 1500 per child per year is available to reduce the clubbed amount. If the child has a disability of 40 percent or more, this clubbing does not apply at all, and the child is assessed independently.

What Actually Changed

This is a renumbering, not a rewrite. The core tests are word for word the same in substance:

• Section number: 64 becomes 99
• The three spouse-clubbing triggers carry forward unchanged, now referenced as 99(1)(ii), 99(1)(iv), and 99(1)(vii) in place of the old 64(1)(ii), 64(1)(iv), and 64(1)(vii)
• Minor child clubbing, earlier under 64(1A), is now under 99(1)(c)
• The manual work and skill exception for minors carries forward unchanged
• The disability exclusion carries forward unchanged
• The Rs. 1500 per child exemption, earlier linked to old Section 10(32), continues to apply under the new Act's corresponding exemption section

If your working papers or client letters cite Section 64, the substance does not need rework. Only the citation changes to Section 99.

Worked Example

Old position, Section 64, applicable up to AY 2025-26:

Mr. Joshi transfers a fixed deposit of Rs. 10,00,000 into his wife's name without receiving anything in return. The deposit earns interest of Rs. 60,000 in FY 2025-26. Separately, his 15 year old daughter wins a state level chess tournament and earns a cash prize of Rs. 50,000, plus she has a savings account in her name that earned Rs. 3,000 in interest during the year.

Result: The Rs. 60,000 interest from the fixed deposit is clubbed into Mr. Joshi's income under Section 64, since the deposit was transferred without adequate consideration. The chess prize of Rs. 50,000 is not clubbed, since it was earned through the daughter's own skill and talent. The Rs. 3,000 savings interest is clubbed with the higher earning parent's income, reduced by the Rs. 1500 per child exemption, so only Rs. 1,500 actually gets added.

New position, Section 99, applicable from AY 2026-27:

Same facts, same family, transactions repeated in FY 2026-27. The outcome is identical. The fixed deposit interest of Rs. 60,000 is clubbed into Mr. Joshi's income under Section 99(1)(iv). The chess prize remains outside clubbing under the skill exception in Section 99(1)(c). The savings interest of Rs. 3,000 is clubbed with the higher earning parent, reduced by the same Rs. 1500 exemption. Only the section numbers cited in the computation change.

Why This Matters for Filing

• Schedule SPI in ITR-2 and ITR-3 continues to be where clubbed income is reported, along with the name and PAN of the person whose income is actually being clubbed. This disclosure requirement does not change with the renumbering.
• Substantial interest checks still matter. Before assuming a spouse's salary from a family business is safe, confirm the 20 percent threshold and whether the spouse holds the professional qualification the role requires. Both conditions have to fail together for clubbing to apply.
• The skill exception has limits. If a minor's prize money or earnings are reinvested, and that reinvestment itself generates income, that secondary income is clubbed even though the original prize money was not. This accretion rule trips up a lot of first time filers for child influencers and young sportspersons.
• This section pairs with Section 100 (old Section 65), which deals with who is actually liable to pay the tax and ensures TDS credit follows the clubbed income correctly, so cross-check both sections together when reviewing a client file with clubbing implications.

Bottom Line

Section 64 has not gone anywhere in substance. It is now Section 99, with the same three spouse triggers, the same minor child rule, the same skill exception, and the same Rs. 1500 exemption. If a client hopes the new Act relaxed clubbing rules, it has not. The test is exactly what it always was: did you give up real ownership, or did you just move the paperwork while keeping the benefit.