Income of Minor

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  1. Ashish12081980

    Ashish12081980 New Member

    In case of Minor, how is income generated through mutual fund, equity, fixed deposits taxed?
    can the same be clubbed to parent having lower income, provided all investments of minor are done by him/her from his/her account and is also declared as guardian in Bank accounts.
  2. ZED

    ZED Well-Known Member

    The income has to clubbed in income of that parent whose total income chargeable to tax, excluding the clubbed income, is more . The income shall remain to be clubbed in future assessment years in the hands of that parent only, unless permission is taken from AO.

    Kindly refer the following relevant provision.

    64(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child , not being a minor child suffering from any disability of the nature specified in section 80U :

    Provided 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 specialised knowledge and experience.

    Explanation.—For the purposes of this sub-section, the income of the minor child shall be included,—

    (a) where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater ; or

    (b) where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year,

    and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.
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