What is income clubbing under the Income Tax Act?

Income clubbing refers to the provisions under the Income Tax Act, 1961 that require certain types of income earned by one person to be included in the total income of another person for taxation purposes. This is done to prevent tax avoidance through diversion of income to lower tax bracket individuals. The most common instances of income clubbing are transfer of income from husband to wife, and income from assets transferred to spouse or minor child.