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Section 100 Income Tax Act 2025: Who Pays Tax on Income Included in Another Person's Total Income?

Section 100 addresses who may be required to pay tax where income from an asset or membership of a firm is included in the taxable income of another assessee. It creates a specific liability for the asset holder or firm member after a notice of demand.

Current law: Section 100 forms part of Chapter V of the Income-tax Act, 2025, effective from 1 April 2026. It broadly corresponds to Section 65 of the Income-tax Act, 1961. This article describes the statutory position and should be read with the applicable amendments and facts.

What does Section 100 of the Income-tax Act, 2025 provide?

Where income belonging to a person other than the assessee, arising from an asset or from membership of a firm, is included in the assessee's total income under Chapter V or Section 25(a), Section 100 permits recovery of the tax attributable to that included income from the person in whose name the asset stands or the person who is a member of the firm, subject to service of a notice of demand by the Assessing Officer.

This is a rule about liability to pay the attributable tax. It does not by itself determine whether income must be clubbed; that question is governed by the applicable inclusion provision.

Section 100 explained clause by clause

Clause (a): Liability of asset holder or firm member

The person in whose name the relevant asset stands, or who is a member of the firm, is liable to pay the portion of tax levied on the assessee that is attributable to the included income, once the Assessing Officer serves a notice of demand for that purpose. The liability is limited by the statutory attribution to the included income, rather than automatically extending to the assessee's entire tax bill.

Clause (b): Jointly held assets

If the asset is held jointly by more than one person, those persons are jointly and severally liable for the relevant tax. This means the law may permit recovery of the attributable liability from a joint holder, subject to the applicable recovery framework.

Clause (c): Recovery provisions

Chapter XIX-D applies accordingly. The demand and recovery machinery must therefore be considered along with Section 100. A taxpayer should examine the actual demand notice and the statutory remedies available in the particular case.

Important distinction: Inclusion of income in one person's assessment and recovery of attributable tax from another person are separate legal steps. Section 100 expressly refers to service of a notice of demand for liability under clause (a).

Important statutory expressions

Assessee: The person in whose total income the relevant income is included under the applicable provision of the Act. The Act's general definition should be consulted for formal proceedings.

Included or clubbed income: Income of another person treated as part of an assessee's total income under Chapter V or Section 25(a), where the statutory conditions are satisfied.

Notice of demand: A formal demand served by the Assessing Officer for payment of the tax attributable to the income covered by Section 100(a).

Joint and several liability: A form of liability under which persons jointly holding the relevant asset may each be answerable for the tax liability specified by the law.

Attributable tax: The portion of tax levied on the assessee that is attributable to the income included from the relevant asset or firm membership; it is not necessarily equal to tax calculated by applying a flat rate to that income.

Practical illustrations

Example 1: Income from an asset transferred to a spouse

Assume an individual transfers an income-producing asset to a spouse without adequate consideration and the resulting income is included in the individual's taxable income under Section 99. If the statutory conditions of Section 100 are satisfied, the spouse in whose name the asset stands may be served a demand for the portion of tax attributable to that included income.

Example 2: Joint ownership

Suppose income from an asset standing jointly in two persons' names is included in another assessee's income under a relevant provision. Section 100(b) makes the joint holders jointly and severally liable for the attributable tax, subject to the statutory demand and recovery process.

These examples are illustrative only; the actual inclusion, attribution and recovery depend on the facts and applicable provisions.

Section 96 - transfer of income without transfer of assets.
Section 97 - income arising from revocable transfers of assets.
Section 98 - definitions of transfer and revocable transfer.
Section 99 - clubbing of income of spouse, minor child and others.
Official consolidated Income-tax Act, 2025 (as amended by Finance Act, 2026).

Frequently asked questions

Does Section 100 automatically make a spouse liable for all tax of the assessee?

No. It concerns the portion of tax attributable to income included under the specified provisions and requires the statutory conditions, including a notice of demand, to be met.

Can a jointly held asset create liability for both owners?

Yes. Clause (b) expressly provides for joint and several liability where the relevant asset is held jointly by more than one person.

Is Section 100 a separate clubbing provision?

No. It primarily addresses payment liability when another provision has already caused income to be included in an assessee's total income.

Which earlier provision corresponds to Section 100?

Section 65 of the Income-tax Act, 1961 dealt with substantially the same subject.

Updated: 10 November 2026. For statutory interpretation, consult the official enacted text, subsequent amendments, notifications and applicable judicial decisions.