An individual transfers an income-producing asset by a transfer that cannot be revoked during the transferee’s lifetime, and the individual derives no benefit from the income. When does section 97…
Question and options
An individual transfers an income-producing asset by a transfer that cannot be revoked during the transferee’s lifetime, and the individual derives no benefit from the income. When does section 97 of the Income-tax Act, 2025 first make the income taxable as the individual’s?
On the death of the transferee
When the power to revoke arises
Immediately on transfer
For each tax year of the transferee’s life
Answer and explanation
Section 97(2) of the Income-tax Act, 2025 excludes from clubbing a transfer not revocable during the transferee’s lifetime where the transferor derives no benefit. Section 97(3) then taxes the income as the transferor’s as and when the power to revoke arises.
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