Income of Minor Child: Shall be clubbed with income of Parent !

Income of Minor Child: Shall be clubbed with income of Parent!




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Income of Minor Child: Shall be clubbed with income of Parent !

As per section 64(1A) of Income Tax Act 1961, income of minor child including minor married daughter shall be clubbed with the income of parent. It should be clubbed in the hands of that parent having higher income subject to condition that marriage of the parents subsists. If the marriage of the parents does not subsist, than in the hands of parent who maintain minor child in the previous year.

Further if the income of minor child is included in the hands of either parent, than in subsequent year it cannot be changed unless Assessing officer is satisfied.

For example : If income of minor child “ X” is clubbed in the hands of his mother for current year than in subsequent year it cannot  be clubbed in the hands of his father unless Assessing officer is satisfied.

However there are exception where income of minor child is not clubbed in the hands of Parent:

  1. Income earned by manual work done by minor child; or
  2. Income earned by activity involving application of his skill, talent or specialized knowledge and experience.
  3. Income earned by child suffering from any disability specified under section 80U of Income Tax Act 1961.

Note:

  1. If none of the parent is alive, than no clubbing provision will apply
  2. If the minor becomes major, than the income till the date he attains majority shall be clubbed in the hands of parent.
  3. As per section 10(32) of Income Tax Act 1961 where income of a minor child is clubbed with the income of his parent, the parent can claim exemption upto actual income clubbed or Rs.1500 whichever is less in respect of each minor child whose income is included.

For more details regarding clubbing refer the below links:

https://thetaxtalk.com/2018/08/25/clubbing-provisions-in-income-tax-and-their-exception/

 

https://thetaxtalk.com/2018/07/16/clubbing-provision/

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