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Clubbing provision for income of minor child

Q. is clubbing provision applicable for income of children?

Ans. Yes, if asset is transferred without adequate consideration to minor child (not minor married daughter) , the income arising from that asset will be clubbed with income of transferor. There is also another provision under section 64(1A). According to this section, income arising to minor child shall be clubbed with income of parent.

Q. will income be clubbed with father’s income?

Ans. When marriage of parents subsists, Income will be clubbed with the income of parent whose total income, excluding the income to be clubbed, is greater. If marriage of parent does not subsist, income will be clubbed with the parent who maintains the minor child in the previous year. Once income is clubbed, it will not be clubbed with other parent in next year. If assessing officer is satisfied with changing the option, he allows clubbing the income with other parent after giving opportunity to be heard.

Q. is there any exemption for clubbing of minor child’s income?

Ans. There is exemption up to Rs. 1,500 for each minor child.

Q.Is there any exemption available for income of minor married daughter?

Ans. No, there is no exemption u/s 64 (1A).

Q. Is there any income on which clubbing provision will not apply?

Ans. Yes, following incomes will not be clubbed with parent’s income.

  1. Activity which requires special skill, talent.
  2. Manual work.
  3. Income arising to minor child suffering from any disability u/s 80U.

Q. then, above incomes are exempt in the hands of minor child?

Ans. No, where clubbing fails, the income shall be taxed in the hands of minor child. Parent can file the return of income on behalf of minor child.

Q. But, what should I do if minor child has no pan card?

Ans. You can apply for pan card for minor child in form 49A.

Q. What is the income tax slab for minor child?

Ans. Tax slabs for individual other than senior citizen and super senior citizen will be applicable to minor child for A.Y 2014-15.

Q. Is clubbing provision applicable for income of adapted child or step child?

Ans. Yes, it is applicable.

Q. if my child has income from singing Rs. 1,00,000 and we invests this amount in bank a/c. Now there is interest income of 8000 on that amount, what shall be treatment of that amount under clubbing provision?

A. Rs. 1,00,000 shall be added to income of child as the income is from personal skill and Rs. 8000 shall be clubbed in the hands of parent under clubbing provision.

Q. My daughter has open saving a/c for minor in bank, what shall be treatment of interest on that account?

A. The interest amount shall be clubbed with parent’s income.

 

 

 

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