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how to file the return of a minor

Indudhar (Tax Advocate) (427 Points)

06 July 2010

A minor is having income and TDS is made on his income on his PAN.

If his income is clubbed in his parent income whose PAN is different, then TDS of minor is credited in parent return or not?

how is this possible, please help me...

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2 Replies

Karthik (Employed) (56 Points)
Replied 06 July 2010

Hi Please read through below, may be it helps..

QUICK LOOK

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.

Computation of Minor's Income
Income earned by a minor is clubbed after allowing for various deductions like gross rent earned from house property is reduced by municipal taxes, a notional deduction of 30 per cent of the annual value and the interest on loans taken to buy the property.

If the income is from other sources, the income is reduced by expenses incurred in earning and then clubbed.

In case of capital gains, the proceeds from the sale of an asset are reduced by the cost of acquisition or the indexed cost of acquisition of asset. The gains are also reduced by the exemption under Sections 54, 54F, 54EC, etc. of IT Act. The balance is clubbed.

If the capital gains arise from the sale of long-term capital assets, the parent of the minor pays the tax at concessional rates as the tax rates on are same on the long-term gains irrespective of whether the child or the parent makes the gain.

The investments in immovable property should be from the minor's resources to enhance her capital in long run. This reduces the family's tax incidence, since the income earned after she turns 18 will be taxed in her hands.

If the immovable property is to be sold during the period the child is minor, it is only after getting the permission from the High Court.

Investment of Minor's Fund

Dividend on shares income from mutual funds, interest on a public provident fund account and the interest on specified bonds is tax-exempt.
Income from a registered partnership firm in which minor is inducted is tax-exempt.

Loss of the Minor
Any loss under any head arising to a minor will be treated as the loss of or the parentsf. It will be adjusted against the parent's other income subject to the provisions of the law

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