Minor Income tax return in India + What is Clubbing of income of Minor?

Minor income tax return in India

Income tax return of minor in India, what is minors according to income tax? – Any person under the age of 18 is considered a minor age for income tax in India.

If you dive deep the tax implication in case of minor income is not so complicated.

The income tax department doesn’t restrict you to get PAN card of Minor. How to apply a PAN Card for a minor?

Section 64(1a): Clubbing of income of Minor child

There are few area minors who can earn income which is taxable and exempted in different conditions.

  • Income from savings in a bank account
  • Interest Income from Fixed Deposit.
  • An investment made by their parents
  • A gift to Minor child – in the form of money.
  • Inherited Property or land.
  • Ancestral Property or Land

The income of minor comes INR 1500 does not get added to the parent’s income and there is no question the income of a minor call for levy of Income-tax.

The parent can claim an exemption of INR 1500 for each minor child whose income is clubbed.

What is Clubbing of income of Minor?

Clubbing of income with parents is the process of adding the income of the minor individuals with the income of parents for income tax purposes under certain conditions.

  • The income of minors is clubbed with the parent whose income is higher than the other parents.
  • In the case of divorce, the income is clubbed with the parent who is the legal custodian of the child.
  • If both the parents are not alive, the income of the minor is not clubbed with the guardian, but instead, a separate income tax return is filed.

India is a country with talent and some minor child able to posses the place like acting, singing, choreographing, and also from then activity like a Masterchef Junior winner, some quiz content, or some record earn a good fatty amount for their skill and talent.

What is section 64(1A) of the Income Tax Act

Under Indian tax law clubbing of income earned by the minor child under Section 64(1A) of the Income Tax Act who has not attained the age of majority. i.e. 18 years of age. Any income earned will be clubbed/added with the income of their parents, whoever has a higher income.

Sec 10(32) of Income Tax Act exemption in case of Clubbing of Income of a Minor Child

If an individual includes an income of his or her minor child under section 64(1A), such individual shall be entitled to exemption of INR 1500 in respect of each minor child under section 10(32) of Income-tax act.

In case the income of Minor is less than INR 1500, No exemption is allowed, That income is already exempted for minor itself.

You can easily reveal the amount in ITR form under exempt income for reporting purpose section.

Which income of minor are taxable in the hands of minor himself?

Does a minor have to file taxes? Yes, there are certain scenarios of the nature of income which is not considered as clubbing of income and the income of a minor call for levy of Income-tax.

  1. The income of a child suffering from any disability specified under Section 80U will not be clubbed with the income of the parent.
  2. The income of a minor child on account of any manual work.
  3. Income of minor child derived from his skill, talent or specialized knowledge and experience (as discussed above).

Question: Clubbing provisions will be equally applicable for losses? Answer: There is no such provision for adjusting the loss of minor will be adjusted/clubbing.

How to file Income tax return of Minor child

Most of the people confused about ‘does a minor have to file a tax return‘ and if yes then ‘when does a minor have to file taxes‘.

However, there are certain areas where income from minors is treated as independent and that will not be included/clubbed in with any other person. Such is the case where the minor is an orphan, that is, where he has lost his parents.

There is a clear picture that first you have to register yourself as the representative for the minor. This activity initiated from the income-tax website by logging with your own PAN card.

  • Step 1 – Go to My Account on the top ribbon.
  • Step 2 – Click Register as Representative.
  • Step 3 – Select minor from the dropdown list and click Proceed.

Register as representative for minor

  • Step 4 – There is some information about a minor and guardian is required.

Representative form

Note:- It is very important to submit/upload the “proof of income as arises or accrues to the minor child on account of manual work done by child or activity involving application of skill, talent or specialized knowledge and experience of the minor“.

After submission the income tax department examines the request and allows you to file an income tax return on behalf of your minor, the process of filling is as similar as individual person.

Gift to Minor child in India

The gift to minor child in India is normal custom, but the income tax department approach is different, There are implications both for the receiver as well as the sender.

There are different forms of gifts to the minor from different people, some are parents, relatives, friends or any other source.

What is the tax treatment of cash gifts received by Minor child?

Cash deposited and investments would start earning income. As the saying goes, income and taxes always go together. Therefore, let’s understand the potential tax implications here.

Firstly the cash amount gifted to the minor from a relative is completed exempted in hand of the receiver depending upon the definition of the relative, According to income tax law the term relative is as follows:

  • Spouse of the individual
  • Brother or sister of the individual
  • Brother or sister of the spouse of the individual
  • Brother or sister of either of the parents of the individual
  • Any lineal ascendant or descendant of the individual
  • Any lineal ascendant or descendant of the spouse of the individual

Bottom line:

# Amount of cash received in excess of INR 50,000 is completely taxable, and the same amount is clubbed with the higher taxpayer parent in case of a minor.

#however, gift received from relatives is completely exempt.

Gifting property to a minor child

Property Gift received under a Will or by way of inheritance is tax exempted until it is sold out, the tax calculation is under certain condition (read for information).

Taxation of income from immovable property owned by a minor

The property gifted by a minor can also be let out or already in rental position (like building, house or apartment), through his guardians. For a let out property, the rental income is taxable and the same amount is clubbed in the hands of parents.

Any property or share in property owned by a minor, cannot be sold or disposed of by the natural guardian of the minor, without taking permission from the court.

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