Goa Chamber of Commerce and Industry (GCCI), as well as the chapter of institute of chartered accountants, made a representation to income tax department pointed out that the departmental software which processes the income tax return does not differentiate between taxpayers governed under Section 5A of the Income Tax Act and those that are not.Thus the total income computed by the department is not as per income tax law only .
Section 5A of the I T Act was inserted by Finance Act, 1994, with retrospective effect from 1-4-1963 .This provision acknowledges the system of community of property which was known under the Portuguese Civil Code of 1860 as “COMMUNIAO DOS BENS during Portuguese Rule.
In simple words, the law says that in case of a Goan couple –Husband and Wife- if they were earlier governed by system of community property, in that case the income tax shall be charged on such income not as community , but by apportioning the income between Husband and wife equally.The said law is applicable for all head of income except Salary. The salary shall be assessed in hands of person who has actually earned it.
The said provision u/s 5A and states as under:
5A. (1) Where the husband and wife are governed by the system of community of property (known under the Portuguese Civil Code of 1860 as “COMMUNIAO DOS BENS”) in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu, the income of the husband and of the wife under any head of income shall not be assessed as that of such community of property (whether treated as an association of persons or a body of individuals), but such income of the husband and of the wife under each head of income (other than under the head “Salaries”) shall be apportioned equally between the husband and the wife and the income so apportioned shall be included separately in the total income of the husband and of the wife respectively, and the remaining provisions of this Act shall apply accordingly.
(2) Where the husband or, as the case may be, the wife governed by the aforesaid system of community of property has any income under the head “Salaries”, such income shall be included in the total income of the spouse who has actually earned it