Mr. Kundra is worried now days about taxability of income earned by his 4 year old child Aryan, as he is earning income by way of modelling. He wants to know whether he has to file a return of income for his child. This is a widespread question among the individuals regarding the taxability of income of minor child; whether the same is taxable in his own hands or will be clubbed with the income of his parents or guardian.

With regard to the income of minor child, the provisions of section 64(1A) of Income Tax act, 1961 (“the Act”) lays down that income of the minor child will be clubbed in the total income of the parent whose income is higher unless the income so derived is from manual work or from any activity involving application of his skill, talent or specialised knowledge or experience.

Once the income is clubbed in the hands of either of the parent, it will continue to be clubbed with the income of same parents even though the income of that parent is lower in the subsequent year. In such case income shall not be clubbed in the income of other parent unless the Assessing Officer is satisfied that it is necessary to do so.

When the income of an individual includes the income of minor child then he shall be entitled to exemption u/s 10(32) of Rs. 1,500 or the income of minor child so included, whichever is lower for each minor child.

When the clubbing provision is not attracted

In the following cases the clubbing provision of section 64(1A) will not be attracted;

• Income from minor child suffering from any disability of specified nature as per section 80U of the Act.
• Income from minor child on account of any manual work.
• Income of minor child on account of any activity involving application of his skill, talent or specialised knowledge & experience.

Where the clubbing provision is not attracted and the income will be taxed as his own income, it is compulsory for the minor to file his return of income in his own name as per the provisions of the act.

Some other points

• Clubbing applies even if the minor resides in India and parents are non-resident Indian (NRI) or vice versa.
• Income of married minor daughter shall also be clubbed.

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