How your minor Childs income is taxable in India – Section 64 (1A) of IT Act, 1961

Income of a minor child is clubbed in the hands of parent. However, if it arise from manual work or from any activity involving his talent or specialized knowledge and experience and such amount generated by a minor child who is suffering from any disability of the nature specified in section 80U then it will not be included in the hands of his parents.Clubbing In The Case Of Minor Child

If income of minor child is to be clubbed then it will be included in the hands of his mother or father whose income is higher excluding the clubbed amount of minor child.

If both mother and fathers are not married then the income of such minor child is to be clubbed in the hands of that parent who maintains the minor child during the previous year.   

If the income of minor child has been clubbed with either of the parent’s then it will continue to be clubbed in succeeding financial year. Such clubbing can be changed by the assessing officer after giving an opportunity of being heard to the taxpayer.

Exemption of Rs. 1, 500 is allowed for clubbing of minor child’s income with the parents. If the income of a minor child is less than Rs. 1, 500 then clubbing will be restricted to such lesser amount and if it is higher than Rs. 1, 500 then clubbing will be restricted to Rs. 1, 500. The exemption of Rs. 1, 500 is per minor child.

FAQ on Clubbing

At which point I should add the income of my minor child ?

Your minor child’s income gets added to your respective head in which you and your minor child have derived it. For example if the minor child has generated certain interest from bank’s fixed deposit then it will get added to other sources head.

My child is working as an artist in films. Can you pleas let me know if I have to include his income ?

Section 64 (1A) states that if a minor child has generated anything because of his skill or talent then it will not be included in the hands of parents. In your case, it will not be clubbed in your hand.

But your minor child will be taxable if he exceeds the basic exemption limit of paying tax (for assessment year 2013-2014 the basic exemption limit is Rs. 2, 00,000).

My minor child has generated income from his specific talent in cricket. He is not liable to pay tax as it does not exceed the basic exemption limit. Now he has derived interest by keeping the money in a fixed deposit account of bank. Will this interest amount get clubbed?

Yes. The interest derived from the bank fixed deposit will get clubbed with the parent’s. It will be clubbed with the child’s mother or father whose income is higher before including the interest amount.

The above interest amount will be clubbed because the amount has not been generated because of the specific skills, talent of the minor child

You are eligible for an exemption of Rs.1, 500 or the amount that your minor child’s has generated which ever is lower.

I have adopted a child and because of his unique talent he is generating an amount of Rs. 2, 50,000 every year by acting as an artist in films and TV media. How he will be taxable and let me know if it will be included with my income?

Clubbing provision under section 64 (1A) will not be applicable if the minor child has generated any amount from manual work or from any activity involving application of skills, talent or specialized knowledge and experience. Clubbing provision will also not be attracted if such minor child is suffering from any disability specified under section 80U of IT act.

It will not get clubbed in your hand as he is generating it from his artist work and it comes due to his talent and skills.

But your child is taxable and he has to pay tax as he has crossed the basic exemption limit of Rs. 2, 00,000 (for assessment year 2013-2014).  You can invest up to a maximum of Rs. 1, 00,000 in to a public provident fund opened up in your minor son’s account to get tax deduction. And by doing this your minor son will not be paying any tax.

I have two minor child and both are generating interest from saving bank deposits. How much exemption I can avail from such clubbing ?

You can get exemption of Rs. 1, 500 per minor child. So the total exemption for your will be Rs. 3, 000

I have opened a fixed deposit with a nationalized bank in the name of my minor son. This financial year we have generated interest out of the fixed deposit. Is the interest amount derived from such fixed deposit to be included in my taxable income?

Yes, it has not been specifically excluded in clubbing provision of IT act. So the entire interest amount will be taxable in your hand and as such will be added in your hand.

My son is participating in stage show due to his singing talent. Will his income get added in my hand ?

No, your son has a specific talent and any amount derived because of such talent will not be clubbed in your hand.

2 thoughts on “How your minor Childs income is taxable in India – Section 64 (1A) of IT Act, 1961

  1. S S Dahale

    As BANK are about deduct TDS on , interest generated through FD’s ( more than Rs.10000/-)in the name of Minor Child ( having PAN No. too), should BANKs are correct to Do so.. with mention of PAN No. of the minor Child Or bank should be asked to Do so.. specifying PAN no. of either of parent , having TDS also from the same BANK.

    Reply

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