While navigating the process of filing an Income Tax Return (ITR), taxpayers often encounter a specific question: “Are you governed by Portuguese Civil Code under Section 5A?” The Income Tax Department requires this information because individuals falling under this specific civil code are subject to distinct tax treatment compared to other taxpayers.

Here is a detailed look at the Portuguese Civil Code and its implications for taxation.

What is the Portuguese Civil Code?

In most of India, marriage is not treated as a contract regarding property, and Indian common law applies. However, the state of Goa operates under a unique legal framework known as the Goa Civil Code (or Goa Family Law), which is based on the Portuguese Civil Code. This law applies to all residents in the region, regardless of their religion.

Under this code, there are four primary regimes for marriage:

• Community property
• Absolute separation of property
• Separation of pre-marital assets with communion of post-marital property
• Dotal regime

If a couple does not explicitly choose an option via contract, the “Community Property” rule applies by default.

Under the community property system, all assets (and liabilities) owned by either spouse before marriage, or acquired through inheritance, are merged into a common pool. Consequently, each spouse holds a 50% right to these assets. Similarly, 50% of the income earned by one spouse is legally considered to belong to the other. Furthermore, neither spouse can sell or encumber these assets without the other’s consent.

Who Falls Under this Law?

The Portuguese Civil Code is applicable to residents of:

• Goa
• The Union Territory of Daman and Diu
• The Union Territory of Dadra and Nagar Haveli

Section 5A of the Income Tax Act Explained

Section 5A of the Income Tax Act addresses the tax liability of individuals governed by the Portuguese Civil Code. It stipulates that income earned by a husband and wife (excluding salary) should be apportioned equally between them.

Key provisions include:

• Income Splitting: Income under various heads (e.g., house property, capital gains) is divided equally and added to each spouse’s total income separately.
• Individual Filing: Each spouse must file their own ITR disclosing only their share (50%) of the common income.
• Salary Exception: Salary income is not subject to this division. It remains fully taxable in the hands of the spouse who earned it.

How to Update Portuguese Civil Code Status on the Tax Portal

If this law applies to you, you must update your profile on the official e-filing portal to ensure accurate tax calculations. Follow these steps:

Step 1: Log in to the official e-filing portal at www.incometax.gov.in.

Step 2: Navigate to the top right corner and select ‘My Profile’.

Step 3: On the profile page, look for the ‘Portuguese Civil Code Applicability’ tab in the left-hand menu and click on it.

Step 4: The portal will display a query asking if the Portuguese Civil Code applies to you.

Step 5: Select ‘Yes’ if you reside in Goa, Daman and Diu, or Dadra and Nagar Haveli. If not, choose ‘No’.

Step 6: If you selected ‘Yes’, you will be prompted to enter your spouse’s PAN and Aadhaar number.

Step 7: Click the ‘Add’ button to link the profiles.

Once updated, you can proceed to file your returns, benefiting from the income apportionment provisions available under the law.