Asset Held by Minor Child Sec 64(1A)

Asset Held by Minor Child Sec 64(1A)

3.            Minor child for this purpose shall include even an adopted child and also stepchild, however, it will not. include the minor child suffering from a disability mentioned under section 80U.

For E.g.. Minor son of Mr. X has interest income of Rs.2,00,000 and the minor child is suffering from a disability, in this case, clubbing provisions shall not be applicable.

4.            If any minor child has income through

(i)  Manual labor or

(ii)   has income through an activity involving the application of his skill talent or specialized knowledge and experience, in this case, clubbing provision shall not apply, rather it will be considered to be the income of the minor child and his tax liability shall be computed separately but the return shall be filed by his father as his guardian.

5.            If the income of minor child is to be clubbed, the exemption shall be allowed under section 10(32) upto 21,500 per annum per child.

E.g. Minor one of Mr. X has interest income from bank fixed deposit 35,000, in this case, amount to he clubbed shall be 35,000 - 1,500 — 33,500

If any minor child has casual income and such income is to be clubbed, in that case, exemption of Rs.1,500 under section 10(32) shall be allowed or not is controversial.

6.            If any person has transferred an asset to a minor married daughter, clubbing provision shall apply in that case also e.g. Minor married daughter of Mr. X has interest income of Rs.1,00,000 from hank deposit, in this case, income shall be clubbed in the minor of mother or father whosoever has higher income and exemption under section 10(32) shall be allowed.

7.            If any minor child has income from manual labor or through an activity involving the application of his skill, talent or specialized knowledge and experience, such income shall not be clubbed but if such income has been invested further, any new income shall be clubbed in the income of mother or father.

Example

The minor son of Mr. X is a child actor. He has an income of 25,00,000 from stage acting, this income will not be clubbed but if this amount was invested by him in a bank as fixed deposit, interest received by him shall be clubbed.

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