Do minors have to pay Tax on their Income? How to file IT Return in case of Minor?
Minors also can earn income from their own talent, fixed deposits, bank accounts or other investments made in their name by the parents. Under Section 64 (1A), any income that arises or paid to a minor is clubbed with the parents income. Clubbing means, such income will be added to the parents income and then it is taxed (just like that income is the parents own income).
In case, both spouses are earning: If both spouses are earning, the Income of the minor shall be clubbed with the parents income whoever has higher total income. The total income of parent should be considered before adding the minors income.
In case the marriage does not exist: The minors income shall be clubbed with the parent who maintains that child (minor).
In case both the parents are not alive: The minors income is not clubbed with the guardian if both the parents are not alive. In this case, a separate IT (income tax) return is filed for the minor.
What are the Deductions?
There are some deductions that are mentioned below,
- If a child (minor) earns the income of Rs. 1500 or more, then the parent can claim for an exemption of Rs. 1500/- for a minor child whose income is clubbed.
- If a child (minor) earns the income less than Rs. 1500, then the entire amount is deduced.
Are there any Exemptions?
There are some exceptions, where the minors income is not clubbed. Such cases are mentioned below,
- If a child earns income with own talent or by any manual work or special knowledge and experience, then that income will not be clubbed and the minor shall pay tax on it.
Example: If minor wins price money from a talent show or dance show, then such income will not be clubbed with the parents income. That minor have to pay tax on it.
- If a child suffering from any disability specified under section 80U earns income, then such income will not be clubbed with the parents income.
Section 80U: Under Section 80U a person is considered as a disabled when he/she is suffering from not less than 40% of any of the following,
Low vision, Blindness, Hearing impairment, Leprosy-cured, Locomotor disability, Mental illness and Mental retardation.
In this case, who should sign the return of income of minor child?
In any of the above case, the return is to be filed in the name of a minor and it has to be signed by either of his/her parents or legal guardian.
Can a minor have a PAN Card?
Yes, a minor can apply for a PAN card.