The Finance Bill, 2026 proposes a technical correction in section 99 of the Income-tax Act, 2025 to fix an inadvertent cross-referencing error relating to clubbing of income. Section 99(1)(a) separately deals with inclusion of a spouse’s income arising from employment in a concern and income arising from assets transferred to the spouse. However, section 99(2), which governs the proportion of income to be clubbed where assets are transferred, incorrectly referred to section 99(1)(a)(i) instead of section 99(1)(a)(ii). The amendment corrects this reference to ensure internal consistency and accurate application of the clubbing provisions. The change is clarificatory in nature and will take effect from 1 April 2026.
Correction of referencing error
Section 99(1)(a)(i) of the Act provides that income of individual to include income of spouse by way of salary, commission etc., from a concern in which the individual has a substantial interest.
2. Section 99(1)(a)(ii) provides that income of individual to include income arising to the spouse from assets transferred.
3. Section 99(2) deals with proportion of income to be included in the hands of individual where asset is transferred. However, in sec. 99(2) inadvertently reference of 99(1)(a)(i) has been given instead of 99(1)(a)(ii).
4. To correct the aforesaid referencing error, it is proposed to correct section 99(2) to give correct reference of 99(1)(a)(ii).
5. It is proposed to amend section 402(27) of the Income-tax Act, 2025.
6. This amendment will take effect from 1st April, 2026.
[Clause 37]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 37 of the Bill seeks to amend section 99 of the Income-tax Act, 2025 relating to income of individual to include income of spouse, minor, child, etc.
It is proposed to make consequential amendment in the said section regarding cross reference.
This amendment will take effect from 1st April, 2026.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
37. Amendment of section 99.
In section 99 of the Income-tax Act, in sub-section (2), for the words, brackets, figures and letters “sub-section (1)(a)(i) or (b)”, the words, brackets, figures and letters “sub-section (1)(a)(ii) or (b)” shall be substituted.
