Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

INcome of the minor

Ramakrishnaraju (supervisor) (211 Points)

14 February 2010

My cousin sister (widowed) with two kids. Her father-in-law deposited Rs.15,00,000/- in the name of minors and she is the guardian. Whether the income will be treated her income or the income of minor? If she considers not getting the interest, can she be called dependant on my cousin brother for the purpose of medical and other benefits from his brother who is a Govt.Servant.

Reply
Follow
Share

7 Replies

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 15 February 2010

the second part of ur Q is not that clear..

the interest from the deposit amount of 15 lacs will be clubbed into your income and you will be liable for tax thereon in accordance with sec 64(1A) of the act. You can claim an exemption of Rs 1500 per child u/s 10(32). This income will however be taxable in the hands of ur father in law, if the transfer is revokable.

Amir (Learner) (4016 Points)
Replied 15 February 2010

Dear ramakrishnaraju,

The amount of Rs. 15 Lacs transferred as gift will be exempt..

But interest thereon will be clubbed in the income of ur cousin sister..Friend Amit has rightly mentioned that deduction of Rs. 1,500/ child will be available...

The term "dependent" has not been defined in Income Tax..

But u mentioned that ur Brother is a Govt. Servant, & as per the DPE(Department of Public Enterprises) guidelines a peron can be treated as dependent if his/her Aggregate Income doesnot exceed Rs. 3,000/Month.

1 Like

Ramakrishnaraju (supervisor) (211 Points)
Replied 17 February 2010

Mr.Amir u re right that her income does not exceed Rs.3500/-(If i am right) per month to consdier as dependant of my cousin. In this case she will be getting Rs.1,20,000/- per annum approximately as interest from the deposit made on the minors. Whether she will be considered as earning more than Rs.3,500/- or how it will be treated so that whether she can be made applicable for the medical benefits scheme.