A new column has been inserted in ITR Forms from AY 2013-14 which asks – Are you Governed by Portuguese Civil Code under Section 5A?
This column is applicable to state of Goa and union Territories of Dadar & Nagar Haveli and Daman & Diu. So those assessee that are not governed by law of these states shall simply select “NO” and in case you are governed by law of these states, you must select “Yes” for the question.
What is Portuguese Civil Code?
The Portuguese Civil Code rules are different from the normal Income tax rules applicable throughout India except the state of Goa and union Territories of Dadar & Nagar Haveli and Daman & Diu.
As per section 5A of Income tax Act and the Portuguese Civil Code rules, income earned by the husband and the wife is equally apportioned between both the spouses, however salary income from employment is excluded from this provision and such income is taxable individually.
So for example, if an individual governed by Portuguese Civil Code earns Rs. 5 Lacs as house property income, Rs. 8 Lacs from Income from Business & Profession and Rs. 2 Lacs as other source income. His wife earns Rs. 1 Lacs as house property income, Rs. 4 Lacs from Income from salary and Rs. 1 Lacs as other source income.
In such case Income taxable under both of them are:
Total Income of Husband – 5+8+2 = 15 Lacs
Total Income of Wife (excluding Salary) – 1+1 = 2 Lacs
Total Income of Couple – 15+2 = 17 Lacs
Taxable Income for Husband – 8.5 Lacs
Taxable Income for Wife – 8.5 + 4 (Salary) = 12.5 Lacs