Income Tax: Minor’s income is clubbed with that of parent with higher total income

Published: December 5, 2018 1:25 AM

Minor’s income is clubbed with that of parent with higher total income.

As per the provisions of the Income Tax Act, any income accruing to a minor child shall be clubbed in the hands of the parent whose total income is higher.

By Chirag Nangia  

Minor’s income is clubbed with that of parent with higher total income

Is it possible to apply for PAN card for my six-year-old son, as my father has invested fixed deposits in his name and the interest is clubbed to my income. That way he can get exemption of up to `2.5 lakh a year and the entire interest income of around `2 lakh a year will be tax free?
– Regu Sukumar

As per the provisions of the Income Tax Act, any income accruing to a minor child shall be clubbed in the hands of the parent whose total income is higher. Please note that a minor child can be held taxable (i.e., clubbing provisions are not attracted) where, either, income is earned by a disabled child or income accrues to him on account of manual work or activity involving application of his skill/talent. Hence, in such circumstances, the parent or guardian of a minor child can apply for PAN card on behalf of the minor child.

I own a one BHK flat. And now I am planning to buy the adjacent one BHK flat. I am going make it into a single flat. Will it be considered a self-occupied flat or two different flats—one self-occupied and one rental for income tax?
—Sameer Bhoir
As per Section 23 of the Income Tax Act, 1961, the annual value of a self-occupied property shall be treated to be nil. However, where an assessee has more than one self-occupied properties, one of them, at the option of the assessee shall be deemed to be let out. The Act, thus provides benefit in respect of only one house property. Combining two adjacent residential house properties that have been purchased separately and treating it as a single residential house for tax purposes is a litigious issue. In the absence of clear direction, it is advisable to treat one as self-occupied and the other one as ‘deemed to be let out’ which shall be liable to tax.

Instead of deducting advance tax of `1 lakh ever quarter, can I ask my employer to deduct the entire tax liability in the month of March. That way I will have more cash in hand for 11 months to spend?
—Pramod Kumar

It must be noted that an employer deducts tax at source (TDS) and not advance tax. An employer is required to deduct TDS at the time of payment of salary to the employees. Since the employer is paying off salary every month, he shall be liable to deduct TDS every month else he shall be liable to pay interest and penalty.

The writer is director, Nangia Advisors LLP. Send your queries to
fepersonalfinance@expressindia.com

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