Section 5A of ITA, 1961 : Section 5A: Apportionment Of Income Between Spouses Governed By Portuguese Civil Code

Explanation using Example

Imagine a couple, John and Maria, who live in Goa and are governed by the Portuguese Civil Code of 1860. They own a rental property from which they earn an annual income of ₹5,00,000. According to Section 5A of the Income-tax Act, 1961, this rental income would not be treated as the income of their community property. Instead, it would be divided equally between John and Maria when calculating their taxes. So, ₹2,50,000 would be added to John's income and ₹2,50,000 to Maria's income for tax purposes.

Additionally, if John has a job where he earns a salary, that salary income will be taxed as part of his total income alone and not be split with Maria, as per the rules of Section 5A(2).