Whether single parents can get income tax exemption on the money deposited in their account as maintenance for a minor child in a divorce settlement case? The Law Commission is set to make recommendations in this regard in the coming days after the issue was referred to it by the Punjab and Haryana High Court. At present, as per the Income Tax laws, the interest on money deposited as maintenance amount for a minor is clubbed with the income of the guardian.
Referring the matter to the Law Commission, the Punjab and Haryana High Court had asked it to consider “as to whether the Income Tax Act, 1961 requires amendment to create exception against clubbing of a minor’s income accruing from maintenance money with either of the parent’s income”.
The court has said that as per its opinion, the circumstances of the minor having received maintenance money are different from say a minor in whose name some business has been started by either of the parent or who has been advanced some gift during the subsistence of marriage of parents.
“The matter is, therefore, forwarded to the Law Commission and the Ministry of Women and Child Development for consideration whether suitable amendments are required to be made in the Income Tax Act, 1961, to ensure that maintenance settled on minors is exempted from income tax or is treated differently,” the court said last January.
The Commission is set to finalise the report in the coming days. While a copy would be sent to the high court, it would also be handed over the Law Ministry.