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Is minor child’s income clubbed with the income of parent? ​

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kruthika asked almost 3 years ago

Hi I am CA student. Can I know, Is minor child’s income clubbed with the income of parent? ​

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 megha answered over 2 years ago

hello, Hi, > when clubbed? income of minor child is clubbed with the income of his/her parent. > when not clubbed? Income of minor child earned on account of manual work or any activity involving application of his/her skill, knowledge, talent, experience, etc. will not be clubbed with the income of his/her parent. However, accretion from such income will be clubbed with the income of parent of such minor. > to whose income, income of minor is clubbed - father or mother? Income of minor will be clubbed along with the income of that parent whose income (excluding minor's income) is higher. > situation if parents lives separately? If the marriage of parents does not sustain, then minor's income will be clubbed with the income of parent who maintains the minor. > exemption In case the income of individual includes income of his/her minor child, such individual can claim an exemption under section 10(32)) of Rs. 1,500 or income of minor so clubbed, whichever is less. > when not clubbing Provisions of section 64(1A) will not apply to any income of a minor child suffering from disability specified under section 80U. In other words income of a minor suffering from disability specified under section 80U will not be clubbed with the income of his/her parent.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered over 2 years ago

Hi, As per section 64(1A) , income of minor child is clubbed with the income of his/her parent (*). Income of minor child earned on account of manual work or any activity involving application of his/her skill, knowledge, talent, experience, etc. will not be clubbed with the income of his/her parent. However, accretion from such income will be clubbed with the income of parent of such minor. Income of minor will be clubbed along with the income of that parent whose income (excluding minor's income) is higher. If the marriage of parents does not sustain, then minor's income will be clubbed with the income of parent who maintains the minor. In case the income of individual includes income of his/her minor child, such individual can claim an exemption under section 10(32)) of Rs. 1,500 or income of minor so clubbed, whichever is less. (*) Provisions of section 64(1A) will not apply to any income of a minor child suffering from disability specified under section 80U. In other words income of a minor suffering from disability specified under section 80U will not be clubbed with the income of his/her parent.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Also, the income of the spouse arising from an asset transferred by the individual for inadequate consideration is clubbed with the income of the individual. However, such clubbing will not be done if the asset is transferred in connection with an agreement to live apart. The income from transferred assets will be clubbed even if the assets are routed by the individual through any other person or association of persons for the immediate or deferred benefit of the spouse.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Mukesh answered almost 3 years ago

Clubbing of Income of Minor Child (less than 18 years old) (1) Some families make fixed deposits in the name of a minor child. Income of a minor is taxable in the hands of the parent whose total income is higher (before including the minor’s income). If the parents are divorced it is clubbed with the person who is maintaining the child. There is one exception to this rule – if the minor has earned an income because of his own manual work, or used his talent or specialized knowledge & experience OR in case of a minor who is disabled (based on definition of disability in Section 80U) and earns an income, such income will not be clubbed. (2) When your minor child’s income is clubbed to your income – exemption is available up to Rs 1500 for each such minor child. Which means if clubbed income is more than Rs 1500, Rs 1500 is the maximum exemption, however if clubbed income is say Rs 800 (less than Rs 1500) exemption is limited up to such lesser amount, Rs 800 in this case. Clubbing of Income of a Major Child (18 or more than 18 years old) You may be giving over some money to your major child (who may not be earning), in this case if the major child invests that money – any income from these investments will not be taxable in your hands but will be taxed in the hands of the major child. So therefore, there will be no clubbing of income in case of a major child. Clubbing of Income of a Son’s Wife You transfer an asset to your son’s wife directly or indirectly without receiving adequate consideration – income from this asset will be clubbed with your income. Or you transfer an asset to a person or AOP, for the immediate or deferred benefit of your son’s wife, without adequate consideration, directly or indirectly – income from this asset will be clubbed with your income

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

In an ideal world, a couple stands together at every moment, a child takes his first step holding his parents’ hand and a daughter-in-law is treated as a part of the same family. This also stands true in the context of tax provisions when it comes to clubbing of income. The Indian tax law has special provisions related to clubbing of income earned by the spouse, minor child or daughter-in-law under specified conditions. The remuneration received by the spouse from a concern in which the individual has a substantial interest is clubbed with the income of the latter. However, if the remuneration is received by the spouse on application of technical or professional knowledge or experience, the clubbing of income will not take place. For example, Ms A has a substantial interest in XYZ and her husband, Mr A, is employed by XYZ without any technical or professional qualification. In this case, the salary income of Mr A will be included in the income of Ms A. Also, the income of the spouse arising from an asset transferred by the individual for inadequate consideration is clubbed with the income of the individual. However, such clubbing will not be done if the asset is transferred in connection with an agreement to live apart. The income from transferred assets will be clubbed even if the assets are routed by the individual through any other person or association of persons for the immediate or deferred benefit of the spouse. For example, Ms A transfers 8% interest bonds without consideration to an association of persons, subject to the condition that the interest income from these bonds will be utilised for the benefit of her husband, Mr A. Interest from bonds will be included in the income of Ms A. Similar provisions are applicable in the case of transfer of income by a daughter-in-law. Any income that arises to a minor child will be clubbed with the income of the parent whose total income is higher than the other parent subject to a deduction of R1,500 per child. If the marriage of the parents does not subsist, it will be clubbed with the income of the parent who maintains the child. However, income earned by the minor child suffering from a specified disability, or on account of manual work, or involving application of his skills or talent, will not be clubbed. For example, Ms A opens a fixed deposit in the name of her minor son. The interest income from such a deposit will be included in the income of Ms A. However, if the minor child receives payment from an entertainment company for a stage show due to his singing talent, such income will not be included in the income of Ms A.

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