The marriage-property system is the threshold question
Section 10 of the Income-tax Act, 2025 applies where husband and wife are governed by the specified Portuguese Civil Code community-of-property system, COMMUNIAO DOS BENS. It divides covered income under each head other than Salaries equally between them, while salary belongs in the actual earner’s total income. It prevents assessment together as the community, whether described as an AOP or BOI. This guide applies to tax year 2026–27 and uses the Act as amended by Finance Act, 2026, checked on 26 October 2026. Income-tax Act, 2025 as amended by Finance Act, 2026: sections 10 and 15(4).
Location alone is not proof of the system
The provision identifies the system under the Portuguese Civil Code of 1860 in force in Goa and the named Dadra and Nagar Haveli and Daman and Diu territories. A Goa postal address, marriage celebration there or joint bank account does not by itself establish that the spouses are governed by that system. Obtain the marriage and governing-property documents and analyse any relevant exceptions or changes. This article does not decide disputed civil status from a certificate’s label or extend the system to every married taxpayer in India.
Compute income by head before allocating it
Section 10(b)–(d) requires a head-wise allocation. Gross bank credits may include capital, transfers, loan receipts and exempt amounts rather than taxable income. Establish the income character and applicable head computation before applying the equal split. Preserve separate capital-gain categories and special-rate character where relevant; a fifty-fifty division does not turn capital gains into ordinary business income or make exempt income taxable.
Do not split salary by moving its cash
The statutory salary exception follows the spouse who actually earned income under that head. Payment into a joint account or later transfer to the other spouse does not convert salary into equally divisible income under section 10. Conversely, a receipt called salary commercially may not legally fall under that head. For example, section 15(4) separately addresses remuneration received by a partner from a firm; classify the receipt under the Act before deciding how section 10 applies.
Separate computation is not an automatic tax-saving formula
After the covered income is divided, clause (c) applies the remaining provisions of the Act to each spouse. Establish each person’s residence, regime, allowable deductions, special-income rules, losses and credits. Do not halve the family’s final tax bill or blindly duplicate one spouse’s deduction claim. Tax-credit reporting and withholding allocation must be reconciled under the applicable credit rules rather than assumed to follow every payment statement automatically.
Close with a two-return reconciliation
Keep the original head-wise computation, equal-allocation schedule, salary-earner mapping and both final return workings. Their combined allocations should reproduce the underlying covered income once. Common errors are splitting salary, allocating only cash collected by one spouse, treating the community as a separate taxable unit under this provision, and claiming the rule solely from residence. The examples assume that section 10 legally applies and show allocation amounts before individual deductions, rates, cess, surcharge or other later adjustments.
Applicable primary references
Income-tax Act, 2025 as amended by Finance Act, 2026: sections 10 and 15(4) Income Tax Department: section 10, 2026 text
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Non-salary income only
Covered computed house-property income is ₹6,00,000 and other-source income ₹80,000. Each spouse receives ₹3,00,000 and ₹40,000 respectively: total ₹3,40,000 each. Combined allocation is ₹6,80,000, matching the covered income.
Illustrative example 2: Salary with common income
Spouse A earns computed salary ₹12,00,000; covered non-salary income totals ₹4,00,000. Each spouse’s non-salary allocation is ₹2,00,000. A’s illustrative income is ₹14,00,000 and B’s ₹2,00,000 before later adjustments, not ₹8,00,000 each.
Illustrative example 3: Both spouses have salary
A’s computed salary is ₹9,00,000, B’s ₹6,00,000 and covered non-salary income is ₹2,40,000. Each receives ₹1,20,000 of the latter. The resulting subtotals are ₹10,20,000 and ₹7,20,000, aggregating ₹17,40,000.
Illustrative example 4: Preserve capital-gain character
Covered computed long-term capital gains are ₹3,00,000 and short-term gains ₹1,00,000. Each spouse’s schedule shows ₹1,50,000 long-term and ₹50,000 short-term. The ₹2,00,000 subtotal per spouse does not authorise taxing all of it at one assumed rate.
Illustrative example 5: Cash movements do not change salary allocation
A’s ₹8,00,000 computed salary enters a joint bank account and ₹3,00,000 is transferred to B’s account. The section 10 salary allocation remains ₹8,00,000 to A and zero of that salary to B. The bank retains ₹5,00,000 from that inflow, but the account movement is not an income-apportionment formula.
Illustrative example 6: Find an omitted allocation
Covered computed non-salary income is ₹10,00,000. A’s draft includes ₹5,00,000 but B’s includes only ₹4,00,000. Total reporting is ₹9,00,000, leaving ₹1,00,000 omitted. On these assumed facts B’s covered allocation should be ₹5,00,000; assess each final tax computation separately.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the relevant tax year | 2026–27 Act and effective amendments. |
| 2 | Establish the governing property system | Marriage/property documents and legal applicability. |
| 3 | Resolve exceptions or changes | Dated civil-status and property-regime evidence. |
| 4 | Classify all receipts | Income heads separated from capital and transfers. |
| 5 | Complete head-wise income computations | Expenses, exclusions and special-income character. |
| 6 | Identify the actual salary earner | Employer and remuneration evidence. |
| 7 | Allocate covered non-salary income equally | Head-wise fifty-fifty schedule. |
| 8 | Prepare each spouse’s separate computation | Residence, regime and individual statutory restrictions. |
| 9 | Reconcile withholding and credits independently | Applicable rules, statements and no double claims. |
| 10 | Tie both returns to the source totals | No omitted or duplicated covered income. |
Sixteen practitioner FAQs
1. Does section 10 apply to every married couple?
No. The spouses must be governed by the specified community-of-property system.
2. Is a Goa address sufficient proof?
No. Determine the applicable marriage-property system on evidence.
3. Which current Act provision is relevant for 2026–27?
Section 10 of the Income-tax Act, 2025, as applicable to that tax year.
4. Is the community assessed together under this provision?
No. Clause (a) prevents assessment together as that community, whether described as an AOP or BOI.
5. How is covered non-salary income divided?
Equally between husband and wife under each relevant head.
6. Can gross bank deposits simply be halved?
No. Establish taxable income and its head before apportionment.
7. Is salary also divided equally?
No. Income under Salaries is included with the spouse who actually earned it.
8. Does joint-account receipt alter the salary exception?
No. Destination of cash does not change who earned salary.
9. Can a later transfer turn salary into common income?
A cash transfer does not itself change the statutory allocation of the salary.
10. Should capital-gain categories be preserved?
Yes. Allocation does not erase their nature or applicable special computation rules.
11. Is every payment called remuneration legally salary?
No. Classify under the Act, including its separate treatment of partner remuneration.
12. Can the family’s final tax simply be halved?
No. Each spouse’s remaining statutory computation must be completed separately.
13. Are deductions automatically duplicated?
No. Entitlement and restrictions apply to the actual claimant and facts.
14. Are withholding credits automatically assigned by this article?
No. Their allocation needs the applicable credit rules and reconciliation.
15. Does the article resolve disputed civil-law status?
No. That threshold requires the actual governing documents and legal analysis.
16. What is the central return control?
Both spouses’ allocations must reproduce the covered income once, while keeping each salary with its earner.
Conclusion
Verify the applicable community-of-property system before dividing non-salary income equally; salary stays with its actual earner and each spouse needs a separate computation.