1. What are the types of income minors,
Any money received by a minor child can be classified into two types: earned and unearned. If a child earns it as prize money by participating in competitions, shows and sports or through his own business, enterprise or part-time job, it will be considered as earned income. If, on the other hand, he has deposited money as a gift from family members, relatives or friends, it will be treated as unearned money. This will also include the interest that he earns through savings bank accounts. Deposit or other investments made by his parents in his name.
2,
Is income tax payable on minor’s income?
Yes, under section 64(1A), any money received by a child below the age of 18 years will be clubbed with the parent’s income and taxed at the applicable rates. If both the parents are earning, the income of the minor will be clubbed with the income of the parent who has higher income. However, a tax exemption of `1,500 per child per year is available to parents on the income of minors for a maximum of two children. The parent will pay taxes for the minor’s income along with their taxes.
3. Are there exceptions to adding income?
If the minor child is an orphan, i.e. both his parents are dead, his income will not be clubbed with the income of the guardian, but tax is paid separately and income tax return is also filed separately . Similarly, the income of a minor, who suffers from specific types of disabilities listed under section 80U, shall not be clubbed with the income of the parent. Disability should be more than 40% due to diseases like hearing disability, blindness, mental illness, locomotor disability etc. If the parents are divorced, the minor’s income will be clubbed with the income of the parent who has custody of the child. Income clubbing also applies to stepchildren and adopted children.
4. Who Files Income Tax Return for Minors?
Since there is no age limit on filing tax returns, the minor has to file tax returns on his income, but his parents can also do so on his behalf. If the return is being filed by a guardian or a person managing his/her affairs, he/she will have to upload relevant documents proving his/her credentials on the Income Tax website. He can then file the tax return of the minor as a ‘representative assessee’.
5.Can a minor child have a PAN card?
Yes, a minor can have a PAN card and his parent or guardian can apply for it. In fact, if the tax return of a minor is being filed independently, he/she will need other information such as bank account details, income details, mobile phone number and e-mail account, as well as income tax portal login and password etc. .
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Disclaimer:
The advice in this column is not from a licensed health care professional and should not be construed as psychological counseling, therapy or medical advice. ET Wealth and the author will not be responsible for the outcome of the suggestions given in the column.