Clubbing Income Of Minor

Clubbing of income means including the income of any other person in the taxpayer’s total income. Under Income Tax law, specified situations are provided, wherein, the income of one person is statutorily required to be included in the income of another person. Such inclusion of income of one person into the income of another person is called ‘clubbing of income’. Provisions of clubbing of income are contained under section 60 to section 64 under the Income Tax Act, 1961. In this article, we discuss the concept of clubbing income earned by a minor child.

Minor Child Income

As per provisions of Section 64 of the Income Tax Act, the income of a minor child is taxable / clubbed in the hands of the parents whose total income (before including income of minor) is higher. If the natural parent of a minor child parents does not exist, then in such cases, the income of minor would be taxable in the hand of the parent who maintains the minor child in the previous year. Also, the child would include both the stepchild and an adopted child. In case of death of both mother and father, the income earned by the minor cannot be clubbed and hence the minor child is required to

file income tax return through his legal guardian. It must be noted that income once included in the total income of either of the parents would continue to be included in the hands of the same parent in the subsequent years, unless assessing officer is satisfied that it is necessary to do so, after giving that parent opportunity of being heard. Finally, if a child attains majority during the previous year, then, part of the income earned by the child during his minor period would be clubbed in the hands of the parents.

When Income Cannot Be Clubbed

In the following situations, minor child income cannot be clubbed in the hand of the parent:

Manual work is done by the minor.
Activity involving the application of any skill, talent or specialized knowledge and experience on the part of the minor.
A child suffering from any disability specified under section 80U.

Investment in Minors Name

As per the

Income Tax Act, the income of the minor, which is not clubbed in the hands of parents, if invested somewhere and income is earned from such investment, then, in such cases, the income so earned from the investment would be clubbed in the hands of the parent. For example, a child who is an artist has earned an income of INR 50,00,000/-. Since the income is earned by the child on the basis of own skill, the income will not be clubbed in the hands of his parents. Further, INR 50,00,000/- earned by the child is invested in fixed deposit and interest of INR 50,000/- is earned out of such investment, then, interest income would be clubbed in the hands of the parents whose income is higher.

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Frequently Asked Questions

Common questions about Clubbing Income of Minor in India: Tax Rules & Exceptions.

According to Section 64 of the Income Tax Act, a minor child's income is clubbed with the income of the parent whose total income (before including the minor's income) is higher. If the parents do not exist, the minor's income is taxable in the hands of the person who maintains the minor child during the previous year.

Income earned by a minor child from manual work or any activity involving the application of skill, talent, or specialized knowledge and experience is not clubbed with the parent's income. Additionally, if the minor child is suffering from a disability specified under Section 80U, their income is not clubbed.

Yes, if the income of a minor child, which was not clubbed with the parent's income, is invested and generates further income, that income earned from the investment will be clubbed with the income of the parent whose total income is higher.

If a child attains majority (turns 18) during the previous year, the part of the income earned by the child during their minor period will be clubbed with the parent's income, while the income earned after attaining majority will be taxable in the child's hands.

Yes, the term "child" in Section 64 includes both a stepchild and an adopted child. Therefore, the income of a minor stepchild or an adopted child can be clubbed with the income of the stepparent or adoptive parent, respectively.

If both parents of a minor child are deceased, the income earned by the minor cannot be clubbed with anyone's income. In such cases, the minor child is required to file an income tax return through their legal guardian.

No, the income of a minor child is clubbed with the income of the parent whose total income (before including the minor's income) is higher. If the total income of one parent is lower, the minor's income will be clubbed with the income of the parent with the higher total income.

Yes, the Income Tax Act provides that the income of a minor child, once included in the total income of either parent, will continue to be included in the hands of the same parent in subsequent years. However, the assessing officer can change the parent whose income the minor's income is clubbed with, after giving that parent an opportunity to be heard, if the officer is satisfied that it is necessary to do so.

For the purpose of clubbing income, the term "child" includes a stepchild and an adopted child, in addition to a biological child. Therefore, the provisions of clubbing income apply to all three categories of children.

Yes, if the income of a minor child is not clubbed with the parent's income due to any of the specified exceptions (such as income from manual work or application of skill), the minor child is required to file an income tax return separately for that income.