CLUBBING OF MINOR’S INCOME – WHEN NOT REQUIRED

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CLUBBING OF MINOR’S INCOME - WHEN NOT REQUIRED

MINOR’S INCOME

Query 1]

Kindly advice on the following query:

  1. I got registered my house in HUDCO, Bhilai, Distt.: – Durg (C.G.) for which I made payment to State of Chhatisgarh as follows:-
    For Patta and lease amount for 10 yrs Rs.40,000/-
    b. Stamp Duty for registration Rs.1, 87,280/-.
    My query is how these are to be shown to claim rebate from my annual income in the Income tax returns to be submitted by 31st July 2010?

  2. For the financial year 2008-09, it was announced by the FM that for the Senior citizens, the interest income from MIS of Post office and of Senior citizen saving scheme can be included in 80C for the rebate. There is a controversy about the availability of deduction u/s 80C on the interest income. Please clarify. I shall be obliged if advised as early as possible in view of the short time left in submission of returns. [shivdev_gupta@hotmail.com]

Opinion:

  1.  It may be note that overall deduction u/s 80C can not exceed the max cap of Rs.1 Lacs. It may be shown as in deduction u/s 80C (under chapter VIA) in the ITR forms (as may be applicable to you).
  2. Investment in an account under the senior citizens Savings Scheme Rules-2004 & Five year time deposits in an account under the post office Time Deposits Rules-1981 is eligible for deduction u/s 80C. The Interest income from post office-MIS or from the deposit made in the Senior citizen saving scheme is never eligible for deduction u/s 80C.

 

Query 2]
  1. My turnover in the financial year 2009-10 has exceeded Rs 40 Lacs. I have not deducted tax at source (TDS) on freight, sale commission & interest payment done by me during the F.Y. 2009-10. Whether the expenses are disallowable u/s 40(a)(ia) for non deduction of tax at source? Is there any remedy so as to rectify the mistake as it is practically impossible for me to recover the tax from the transporters/others to whom I have already paid the amount. In earlier years, I was filing my return declaring profit @ 5% of my turnover as I am engag in retail trade business. Please suggest appropriate remedy.
  2. What is the TDS rate on brokerage, Advertisement expenses, printing charges, interest & professional fees payment? [R. Kashikar]
Opinion:
  1. For the Financial Year 2009-10, you are not required to comply with the T.D.S. Provisions. In your case, F.Y. 2009-10 is the first year of your turnover exceeding Rs 40 Lacs limit. For individual assessee, T.D.S. provision is applicable only if his turnover in the immediately preceding financial year (F.Y. 2008-09 in your case) exceeds Rs 40 Lacs. Your income was cover by Section 44AF in the F.Y. 2008-09 which means that your turnover was below Rs 40 Lacs in the immediately preceding financial year. You will be require to comply with the provision of T.D.S. from the F.Y. 2010-11. A consequence of non-compliance in the present case is not applicable. There is no question of disallowance u/s 40(a)(ia) in the present case.
  2. For the benefit of all our readers, we are producing herewith the detail TDS Chart with basic threshold limit above which tax is deductible, rate of TDS, Section under which deductible, etc as under:

 

 

 

 

Nature of payments made to resident

 

 

Threshold

 

Individual / HUF Payee

Payee other than

Individual / HUF

 

If No / Invalid PAN

Sec. Description Upto 30.06.2010 From 01.07.2010 Rate Rate Rate
194A Interest – Payable by Banks 10000 10000 10 10 20
Interest – Payable by Others 5000 5000 10 10 20
194B Winning from Lotteries / Crossword Puzzle 5000 10000 30 30 30
 

194C

Payment to Contractors – Single Transaction 20000 30000 1 2 20
Payment to Contractors – Aggregate during FY 50000 75000 1 2 20
194D Insurance Commission 5000 20000 10 10 20
194H Commission / Brokerage 2500 5000 10 10 20
194I Rent-Land/Building (including factory Building) 120000 180000 10 10 20
Rent – Plant / Machinery 120000 180000 2 2 20
194J Professional Fees 20000 30000 10 10 20

 

Query 3]

The income of the minor child is requir to be clubb with the income of the parents. I read somewhere about the exception when the income is not require to be clubb. Is it so? If yes, what are exceptions to the rule? Please quote the relevant section. [JP]

Opinion:

  1. Section 64(1A) of the IT Act-1961 provides that in computing the total income of an individual all incomes accruing/arising to his minor children are to be includ with the income of the individual barring certain exceptions. Exceptions when the income need not be clubbed are as mentioned in (2) & (3) below.
  2. Entire income of a minor child who suffers from any disability, as specify in the section 80U, is not to be clubb with the income of the parent.

The proviso to section 64(1A) provides that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any –
(a) Manual work done by him; or
(b) Activity involving application of his skill, talent or specialized knowledge and experience.

MINOR’S INCOME


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