MINOR CHILD BECOMES MAJOR
This query is : Resolved
24 May 2011
If during the financial year a minor child becomes major, then what is the correct way of computing his income..
1) whether to club the income of minor upto the date of majority with the income of his parent and for rest of the year, file the return of Income as major?
or
2) considering that the child was major as on 31-3-11, whole year income should be assessed in his hands only.?
1) whether to club the income of minor upto the date of majority with the income of his parent and for rest of the year, file the return of Income as major?
or
2) considering that the child was major as on 31-3-11, whole year income should be assessed in his hands only.?
24 May 2011
as the assessment year falls one year later, after the majority, so the whole income of the ay in which the minor gets major would be filed by minor at major stage in AY, as in AY he is major now
though there is no bar to calculate as per 2) and then go for individual return after that year
though there is no bar to calculate as per 2) and then go for individual return after that year
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24 May 2011
Sir thanks a lot for your reply.
But sir many experts are of the view that the income upto the date of majority should be clubbed and income for the rest of the year should be assessed as income in hands of child as a major..
Sir, is there any case law regarding this issue.?
But sir many experts are of the view that the income upto the date of majority should be clubbed and income for the rest of the year should be assessed as income in hands of child as a major..
Sir, is there any case law regarding this issue.?
24 May 2011
Please reply...
24 May 2011
before the above issue, we have to look into some facts
1) its deemed that minor child has no income of self, all such funds invested, deployed are of parents from which minor child earns interest/gains,
the income of minor child get clubbed to parents income, whichever parent has higher income.
a deduction is available from income of minor child @ 1500 per year, upto 2 child.
any income/earning for minor child has used his telent/skill, would not be clubbed in parents income, and in such situation minor child would have to file his returns, under signature of guardian.
2) when a minor child has its own income ( apart from investment from parents funds), then he is not barred to file return. situation does not get change dramaticaly on his attaining majority, so almost same situation goes on, i.e if he is getting clubbed with parents, then mere his P/L a/c will get detatched with parents, but no major income may show of his own, if any major income is there then i was also in past. ( there are certain exceptions also)
2) say if minor attaining majority is going to file 1st time, in any way, split balance sheet, just5 below 18>19 range or 19>20 range ( all three situations are probable as per your query), then what tax implications are there as per incometax?
a) he will get threshold limit exemption
b) his parent will get relief of tax addition due to minor child
c) in case of split computation, the same would be added to parent as well as minor child, fear of cascading effect will arise.
I dont think that a minor child which attained majority in previous year, and who has not been filing his returns in past, can attain the threshold limit even of his own, coz majority of funds of his parents wehich are to be going to added to his parents.
Few experts (?) suggest birthday gifts to be inserted in hands of such 1st time filer child, to make his capital, but they forget that this child was present in his previous 17 birthday's also, and suddenly at 18 what miracle happened that he got so much gift in place of NIL in earlier years?
I belive that every minor child, who is attaining majority has to get in study for next couple of years, and need parent's financial support also for his/ her studies, so how his/ her income would be put to tax?
Whatsoever we do in such cases, the human earnings are taxed, by way of clubbing, govt is getting little more money, by way of individual file, govt will get one more tax payer, so govt is not at all worried about the tax filing of minor, coz he is getting tax (with parents) or tax file (individual) in either way,
However after transition period, its not suggested to keep the file attached, and better to file it separately, it will help the child to build capital.
1) its deemed that minor child has no income of self, all such funds invested, deployed are of parents from which minor child earns interest/gains,
the income of minor child get clubbed to parents income, whichever parent has higher income.
a deduction is available from income of minor child @ 1500 per year, upto 2 child.
any income/earning for minor child has used his telent/skill, would not be clubbed in parents income, and in such situation minor child would have to file his returns, under signature of guardian.
2) when a minor child has its own income ( apart from investment from parents funds), then he is not barred to file return. situation does not get change dramaticaly on his attaining majority, so almost same situation goes on, i.e if he is getting clubbed with parents, then mere his P/L a/c will get detatched with parents, but no major income may show of his own, if any major income is there then i was also in past. ( there are certain exceptions also)
2) say if minor attaining majority is going to file 1st time, in any way, split balance sheet, just5 below 18>19 range or 19>20 range ( all three situations are probable as per your query), then what tax implications are there as per incometax?
a) he will get threshold limit exemption
b) his parent will get relief of tax addition due to minor child
c) in case of split computation, the same would be added to parent as well as minor child, fear of cascading effect will arise.
I dont think that a minor child which attained majority in previous year, and who has not been filing his returns in past, can attain the threshold limit even of his own, coz majority of funds of his parents wehich are to be going to added to his parents.
Few experts (?) suggest birthday gifts to be inserted in hands of such 1st time filer child, to make his capital, but they forget that this child was present in his previous 17 birthday's also, and suddenly at 18 what miracle happened that he got so much gift in place of NIL in earlier years?
I belive that every minor child, who is attaining majority has to get in study for next couple of years, and need parent's financial support also for his/ her studies, so how his/ her income would be put to tax?
Whatsoever we do in such cases, the human earnings are taxed, by way of clubbing, govt is getting little more money, by way of individual file, govt will get one more tax payer, so govt is not at all worried about the tax filing of minor, coz he is getting tax (with parents) or tax file (individual) in either way,
However after transition period, its not suggested to keep the file attached, and better to file it separately, it will help the child to build capital.
24 May 2011
Thank you sir.
24 May 2011
At the time the child becomes major, the income earned till the date the child turns 18 is to be clubbed. In case of earning from business of minor, the profits for the year in which he / she turns 18 whould not be clubbed, since they would accrue on the last day of the year.
24 May 2011
Sir even if the business income includes share trading or commodity trading income?
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