An individual gifts ₹6,00,000 to his wife, who invests it as capital in a firm assessed as such; on the first day of the tax year her total capital is ₹10,00,000. She receives ₹2,65,000 as her share…
Question and options
An individual gifts ₹6,00,000 to his wife, who invests it as capital in a firm assessed as such; on the first day of the tax year her total capital is ₹10,00,000. She receives ₹2,65,000 as her share of the firm’s profits and no interest or salary. How much is included in the individual’s total income?
₹2,65,000
₹1,59,000
Nil
₹1,06,000
Answer and explanation
A partner’s share in the total income of a firm assessed as such is excluded from the partner’s total income by Schedule III (Table item 2) of the Income-tax Act, 2025, so there is no taxable income to club. The section 99(2) proportion (₹2,65,000 × 6/10 = ₹1,59,000) would apply only to taxable income or interest from the firm.
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