Apportionment of income between spouses governed by Portuguese Civil Code
[Section 10 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
If a husband and wife are governed by the community of property system (known as “COMMUNIAO DOS BENS” under the Portuguese Civil Code of 1860) in the State of Goa and the Union territories of Dadra and Nagar Haveli and Daman and Diu, then––
- (a) their income under any head of income shall not be assessed together as that of community of property;
- (b) the income mentioned in clause (a) under each head of income other than “Salaries” shall be divided equally between the husband and the wife;
- (c) the income so divided shall be included separately in the total income of the husband and the wife, and the remaining provisions of this Act shall apply accordingly; and
- (d) where either the husband or the wife, has any income under the head “Salaries”, that income shall be included in the total income of the spouse who has actually earned it.
FAQs on Section 10 of the Income Tax Act 2025
1. What is the relevance of the Portuguese Civil Code in the Income Tax Act, 2025?
The Portuguese Civil Code of 1860, applicable in Goa, Dadra and Nagar Haveli, and Daman and Diu, provides for a community of property system (“COMMUNIAO DOS BENS”), under which assets and income acquired after marriage belong to both spouses equally. Section 10 of the Income Tax Act, 2025, prescribes how such income should be apportioned for tax purposes.
2. Does Section 10 apply to all married couples in India?
No, this section specifically applies to husband and wife governed by the Portuguese Civil Code of 1860 in the State of Goa and the Union territories of Dadra and Nagar Haveli and Daman and Diu.
3. Does this law apply to couples married before or after the enactment of the Income Tax Act, 2025?
Yes, it applies to all married couples governed by the Portuguese Civil Code, irrespective of when they were married.
4. Will the income of the couple be assessed together as community property?
No, their income will not be assessed as a single unit or community property. Instead, it will be apportioned and assessed separately.
5. How is income under different heads of income apportioned between spouses?
- Income under any head other than “Salaries” → divided equally between husband and wife.
- Income under the head “Salaries” → taxed in the hands of the spouse who actually earned it.
6. If both spouses earn salaries, how will their salary income be taxed?
Each spouse’s salary income will be taxed in their own hands, without any apportionment.
7. What happens if a spouse has both salary and non-salary income?
The salary income will be taxed solely in the hands of the earning spouse. Any other income (e.g., rental income, interest, business income) will be split equally and taxed separately in each spouse’s total income.
8. If a husband owns a rental property in Goa, how is the rental income taxed?
Since rental income falls under “Income from House Property” (not salaries), it will be divided equally between the husband and wife and taxed in their respective hands.
9. If the wife owns a business, how is the business income taxed?
Under the community of property principle, business income (unless it is classified as salary) is divided equally between the spouses and taxed separately.
10. What happens if a couple jointly invests in shares and earns capital gains?
Since capital gains fall under “Income from Other Sources” (not salaries), the gains will be split equally and taxed in the hands of both spouses.
11. How should the income be reported in Income Tax Returns (ITR)?
Each spouse must file their own ITR and report:
- Salary income (if any) in their own return.
- 50% of the other eligible income in their respective return.
12. What if the couple does not wish to split the income?
The income apportionment is mandatory as per Section 10 of the Act. The couple cannot opt out of the provision.
13. Does this provision affect the applicability of deductions and exemptions?
No, deductions and exemptions will be applied separately to each spouse’s share of income, as per normal tax provisions.
14. How does this affect tax slabs and rates?
Since income is divided, each spouse’s taxable income may fall into lower tax slabs, potentially reducing overall tax liability.
15. If one spouse is a non-resident, does the provision still apply?
Yes, as long as the couple is governed by the Portuguese Civil Code in Goa, Dadra and Nagar Haveli, or Daman and Diu, the apportionment rules apply, regardless of residency status.
16. Does this provision apply to same-sex marriages or civil partnerships?
The Act explicitly refers to “husband and wife.” Whether it extends to other partnerships would depend on legal interpretation and any amendments in tax laws.
17. What if the couple divorces or legally separates?
The community of property system ceases to apply post-divorce, and each person’s income will be taxed individually.
18. What if a spouse passes away?
Upon the death of one spouse, the community of property dissolves. The surviving spouse and legal heirs will be taxed as per normal inheritance laws.
Section 10 of the Income Tax Act, 2025 provides a structured approach for apportioning income between spouses governed by the Portuguese Civil Code in Goa, Dadra and Nagar Haveli, and Daman and Diu. It ensures that:
✅ Non-salary income is equally divided between husband and wife and taxed separately.
✅ Salary income is taxed solely in the hands of the earning spouse.
✅ Each spouse files their own tax return, preventing joint taxation as a single entity.
✅ Apportionment is mandatory, ensuring compliance with the community of property principle.
✅ Deductions and exemptions apply separately, which may reduce overall tax liability.
This provision aligns with local property laws while ensuring fairness and clarity in taxation. Proper understanding and compliance with these rules can help couples optimize tax planning and avoid legal complications.
