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Clubbing of income of son

HARSH (STUDENT) (524 Points)

07 August 2012

HELLO FRIENDS,

I WOULD LIKE TO ASK ALL THAT CAN THE MAJOR SONS INCOME BE CLUBBED WITH THEIR PARENTS INCOME AND WHAT WILL HAPPEN WHEN THAT MAJOR CHILD HAS ITS OWN PAN. AND TDS HAS BEEN DEDUCTED ON HIS INCOME.

WILL THE PARENTS BE LIABLE TO RECEIVE THE TDS WHICH IS IN THE NAME OF MAJOR CHILD.

IN ONE OF THE CASE AT OUR OFFICE WE FILED THE RETURN AND WE CLUBBED THE INCOME BUT THE INCOME TAX DEPARTMENT DID'T GAVE AS THE REFUND OF THE AMOUNT OF SONS AND WE JUST RECEIVED THE AMOUNT OF PARENTS REFUND .

SO NOW WHAT I HAVE TO DO SHOULD I FILE THE RETURN OF THE MAJOR SON TO RECOVER THE TDS AMOUNT OR ANYTHING ELSE PLEASE HELP ME IN THIS MATTER AS I HAVE TO DO FOR THIS YEARS RETURN

PLEASE HELP SOON

HARSH

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2 Replies

CA. Subhash Dangi (Chartered Accountant) (1784 Points)
Replied 07 August 2012

Clubbing of income provision is applicable to only minor children as under:

A minor's income is clubbed with that of the parent with the higher income.
Only income earned till the year the minor attains age 18 is clubbed.
A minor's income is clubbed after allowing for various deductions.

In excess of Rs. 1,500 earned by a minor, the income is added to the parent with higher income, irrespective of the residential status of either the child or the parent. The clubbing provision is applicable even if the parents are NRI and the minor stays in India or vice-versa.

Non-clubbing of Minor's Income
Clubbing provision is not applicable in the following cases:

If the minor is suffering from permanent physical disability.
If the minor earns through manual work or by using skills, experience, talent or specialised knowledge. It will be taxed as her own income.

Exception: Income up on such incomes are clubbed with parents, like interest received from bank if the money is deposited.

Parent's Income
The minor's income is clubbed with the parent with higher income in the year the minor first earns income. Supposr it is clubbed with the mother's income in the first month, it cannot be clubbed with that of father in the following years, even the income of father exceed that of mother.

Majority of child
At the time the child becomes major, the income earned till the date the child turns 18 is to be clubbed. In case of earning from business of minor, the profits for the year in which she turns 18 whould not be clubbed, since they would accrue the last day of the year.