{"id":21644,"date":"2020-12-11T16:00:54","date_gmt":"2020-12-11T10:30:54","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21644"},"modified":"2020-12-11T16:00:56","modified_gmt":"2020-12-11T10:30:56","slug":"legal-liabilities-meant-under-income-tax-for-minors","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/","title":{"rendered":"What are the Legal Liabilities meant under Income Tax for Minors?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Considering\nthe contemporary world, minors today are willing more to earn their money. And\nindeed, many prefer to be independent more financially. The more of upcoming\ngeneration socially inclined towards holding more fame and name, the sooner\nchildren wanted to come out of the term that is being used on the minor. Therefore\nthe question arises about the liability of Income tax for minors as well.<\/p>\n\n\n\n<p>The\nIndian government has strictly banned child labour. Therefore the earning other\nthan child labour will be considered as a real earning. The children can still\nearn income from other sources like winning a dance competition, karate\ntournament, a quiz contest, savings in the bank, investments made in the\nchildren&#8217;s name, or any fixed-term deposits. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#What_are_Two_Types_of_Income\" >What are Two Types of\nIncome?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#How_does_a_minor_Pay_a_Tax\" >How does a minor Pay a Tax?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#What_is_a_Minimum_Age_to_File_an_Income_Tax_for_Minors\" >What is a Minimum Age to File an Income Tax for Minors?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#Determination_of_Income_of_a_Minor\" >Determination of Income of a Minor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#How_can_we_Club_with_an_Income_of_the_Minor\" >How can we Club with an Income of the Minor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#Who_can_all_get_a_Tax_Refund\" >Who can all get a Tax Refund?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#Whether_Teenagers_are_Required_to_File_Income_Tax_Returns\" >Whether Teenagers are Required to File Income Tax Returns?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/legal-liabilities-meant-under-income-tax-for-minors\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Two_Types_of_Income\"><\/span>What are Two Types of\nIncome?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The two types of income earned by minors are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"1000\" height=\"546\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-Two-Types-of-Income.png\" alt=\"Two Types of Income\" class=\"wp-image-21645\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-Two-Types-of-Income.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-Two-Types-of-Income-300x164.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-Two-Types-of-Income-768x419.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure><\/div>\n\n\n\n<p><strong><em>The Earned income<\/em><\/strong> is\nwhen a child earns his\/her own money by salary or by winning any\ncompetition\/contest\/tournament\/, etc. The <strong><em>unearned income <\/em><\/strong>is when a child does\nnot earn the amount but receives it by any proper legal mode. <\/p>\n\n\n\n<p>For instance, money is funded by any\ngrandparents to their grandchild for the future. Income tax returns are\ncalculated based on minor children&#8217;s savings or investments. <\/p>\n\n\n\n<p>However, there are certain exceptions for\nthe same. The minors working at odd jobs do not require filing income tax\nreturns. There is, however not any specific age limits to file income tax\nreturns for children. All that matters is not age but the income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_a_minor_Pay_a_Tax\"><\/span>How does a minor Pay a Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Parents or guardians can teach children\nabout paying their own taxes. However, sometimes, it might not be easy for them\nto understand the seriousness or reliability needed for it. Therefore, parents\nare requested to pay his\/her child&#8217;s income tax on behalf of them. The income of\na child has to be clubbed with parents in case an income of the child is more\nthan Rs.1500.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Exemptions and Restrictions on Paying Tax for Minors<\/h3>\n\n\n\n<p><strong><em>There are a few exemptions and restrictions that are\nto be followed while filing taxes in a name of a child who secures earned or\nunearned income.<\/em><\/strong><\/p>\n\n\n\n<ul><li>If both mother and father are earning members of the family, then income of the minor will be added to their income of that parent whose income is higher from others.<\/li><li>If parents are divorced, then an income of a child would be added to the parent who takes custody of a child, the tax for minors will be added to their income of that parent. <\/li><li>When a child is suffering from any of the specified disabilities which come under <strong><em>Section 80U<\/em><\/strong>, then an income of a child cannot be clubbed with an income of parent. The child will be considered as differently-abled only when he\/she suffers from blindness, hearing impairment, locomotors disability, poor vision, or mental illness, which is if more than 40%).<\/li><li>If a child&#8217;s parents are dead, then he\/she must file for separate income tax. However, in this case, the guardian cannot get the salary inclusion benefit from this.<\/li><\/ul>\n\n\n\n<p>Always help your child learn his\/her\ncitizenship duties. It is advisable for the child to hold a PAN card. However,\nplan in advance to pay income tax to your child if your child earns an income.\nYou can subsequently avail of the benefits by paying the income tax for your\nchild. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Minimum_Age_to_File_an_Income_Tax_for_Minors\"><\/span>What is a Minimum Age to File an Income Tax for Minors?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are NO minimum age criteria to file\nan income tax for a person. Even an infant can also pay his\/her income taxes\nbased on a few exceptions. Income tax must be collected from a child&#8217;s income\nif it is either earned money or unearned money. The earned money is when the\nchildren earn money by winning any competition\/contest\/tournament. The salaried\namount also comes under the earned money category. <\/p>\n\n\n\n<p>Wherein unearned money is when the money is\nnot directly earned by a minor, i.e., for instance, if an amount is funded by\nhis grandparents for their future. Income tax returns are calculated based on\nminor children&#8217;s savings money or their investment. However, there are certain\nexceptions to it. <\/p>\n\n\n\n<p>A minor if working at odd jobs does not\nrequire filing income tax returns. There are many odd jobs available that are\ntaken into account legally. Such jobs are barred by law and workers neglect the\nexistence of income tax.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Determination_of_Income_of_a_Minor\"><\/span>Determination of Income of a Minor<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to <strong><em>section 10(32)<\/em><\/strong> of\nIncome-tax Act, there is a provision when a minor&#8217;s income is not included with\nhis\/her parent. It is when an amount earned by a minor is less than Rs.1500 per\nmonth. Therefore, a minor can enjoy his income if he\/she receives less than\nRs.1500. This particular rule will be applicable to the amount transferred by a\nparent, uncle, grandparent, etc. when an amount is less than Rs. 1500 a month,\nit will become tax-free. <\/p>\n\n\n\n<p>Basically, an income attained by a minor\ncould be through an investment made under his\/her name by the parents in a\nPublic Provident Fund (PPF), a mutual fund, a bank deposit, etc. Apart from\nthat, a child can generate income through any manual work done, such as by\nexhibiting his\/her own knowledge, skill, talent, experience. For example, presently,\nmany kids work in the film industry, participating in television competition\nshows, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_can_we_Club_with_an_Income_of_the_Minor\"><\/span>How can we Club with an Income of the Minor?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An income of the minor can be clubbed with\nhis\/her parent&#8217;s income when a minor who earns an amount is more than Rs.1500.\nAs per <strong><em>Section 64(1A)<\/em><\/strong> of Income Tax Act, 1961, an income generated by\nthe minor can be clubbed with an income of the parents (exceptions are there).<\/p>\n\n\n\n<p>If both parents his\/her are working, then a minor&#8217;s income will be clubbed with one who has higher earnings. Here clubbing will be done until a child is minor, and once they attain the age of majority i.e. 18 years, their income will get assessed independently. When an investment was made under a name of a child, then an income generated from such investment is clubbed with an income of parents. There are however, few exemptions and restrictions to be followed while filing tax for minors who receives earned or unearned money. <\/p>\n\n\n\n<p>Usually, when an investment was made under a name of a child, one of the parents has to enclose his own PAN number, KYC details, bank account details, identity proof, address proof, etc. In case parents are divorced, then filing of an income tax return of a child will fall under either of parents who have custody of that child. Similarly, if both parents have died and child is maintained by the guardian, then the income  and tax for minors will NOT be clubbed with the guardian income; rather a separate income tax return has to be filed under the name of a child.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_all_get_a_Tax_Refund\"><\/span>Who can all get a Tax Refund?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are quite a few things about claiming\nof Income Tax Refunds as one has to be fully aware of. According to the Income\nTax Act, the following entities are required to file ITRs compulsorily \u2013<\/p>\n\n\n\n<ul><li>All <strong><em>individuals below age of 59<\/em><\/strong>\nand earning more than Rs 2.5 lakh in the Financial Year<\/li><li>Every <strong><em>senior citizen at age group of 60\nto 79<\/em><\/strong> and earning more than Rs 3 lakh in the Financial Year<\/li><li>All the super <strong><em>senior\ncitizens aged 80 or above<\/em><\/strong> and earning more than Rs 5 lakh in the\nFinancial Year.<\/li><li>All registered companies that\nare generating income<\/li><li>Those wishing to claim the\nrefund against an excess tax paid\/deducted<\/li><li>Individuals having the assets\nlocated outside India.<\/li><li>If any income from a property,\nunder the charitable trust<\/li><li>If any transaction made under\nAnnual Information Return<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Can a Minor Receive an Income Tax Refund?<\/h3>\n\n\n\n<ul><li>Any individual will be eligible to claim an Income Tax refund if he\/she has paid more tax than an actual tax liability. Such a scenario arises when a self-assessment tax and advance tax paid by or TDS deducted from a taxpayer is more than his actual tax liability.<\/li><li>Any taxpayer can claim the refund of excess tax deducted\/paid during a particular financial year if he\/she files the Income Tax Returns for that year.<\/li><li><strong>The Income Tax Act<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/income-tax-act.aspx\"><strong>[1]<\/strong><\/a><\/sup> says that the taxpayer is required to file his\/her return <strong><em>before July 31st<\/em><\/strong>, in the relevant Assessment Year, to be able to claim an Income tax Refund. Therefore, if an IT return is filed in the name of a teenager, and all criteria are fulfilled, he\/she can get the tax refund in due course, like any other Indian taxpayer.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Whether_Teenagers_are_Required_to_File_Income_Tax_Returns\"><\/span>Whether Teenagers are Required to File Income Tax Returns?\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to <strong><em>Section 64 (1A)<\/em><\/strong> of Income\nTax Act, any income paid or accrued to a minor will get added to the income of\nthe parent. The taxes have been imposed on a parent, assuming this income to be\n<strong><em>&#8216;his\nown<\/em><\/strong>.&#8217;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">There are some exceptions.<\/h3>\n\n\n\n<p>If a teenager earns his\/her income from an activity or by means of any work, for which he\/she employs with special knowledge or talent, he\/she needs to <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>file Income Tax Return<\/strong><\/a>. For instance, the teenaged winner of a reality show (Indian Idol Junior and Sa Re Ga Ma Pa) will require to pay his\/her own taxes. They have to file IT Return duly and can claim for Tax Refunds against excess tax paid\/deducted if any. <\/p>\n\n\n\n<p>If a teenager is suffering from any\ndisability\/ailment specified under Section 80 U of Income Tax Act, his\/her\nincome cannot be attached to an income of a parent. The same will be applied\nfor the differently-abled teenager (in case he\/she is suffering by more than\n40% from poor vision, locomotor disability, hearing impairment, and mental\nillness).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Minors are individuals who are below 18\nyears of age. Minor&#8217;s income never encourages child labour, as it is barred in\nthe eyes of law. However, the children still can earn money in various ways of\ncompetition and receive money from their parents and grandparents. <\/p>\n\n\n\n<p>Minors are able to receive income from various sources, for example, savings from fixed deposits or interest earned on bank accounts or from any other investments in their own name. If a minor&#8217;s income is less than Rs. 1,500 per month, it won&#8217;t be added to the parent&#8217;s income. If a minor&#8217;s income is more than Rs. 1,500 p.m. then the parents must pay tax for minors on the income, and that income will be treated as the income of parents.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbdt-provides-itr-filing-compliance-check-for-scheduled-commercial-banks\/\">\nCBDT Provides ITR Filing Compliance Check for Scheduled Commercial Banks\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Considering the contemporary world, minors today are willing more to earn their money. And indeed, many prefer to be independent more financially. The more of upcoming generation socially inclined towards holding more fame and name, the sooner children wanted to come out of the term that is being used on the minor. Therefore the question [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":21649,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[152],"tags":[1311],"acf":{"service_id":"46"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":4742,"readingTime":6,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21644"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21644"}],"version-history":[{"count":24,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21644\/revisions"}],"predecessor-version":[{"id":21684,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21644\/revisions\/21684"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21649"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}