Tax Liability on Trading Account in Name of Person with Disability (Autism) Operated by Guardian
This query is : Resolved
25 January 2026
Dear Sir / Madam,
I seek your expert guidance on a specific income-tax issue relating to a proposed Demat and Trading Account for my son, who is a Person with Disability (PwD) suffering from Autism Spectrum Disorder (ASD).
Background:
My son Shounak Ghosh is an adult (major) and is on the autism spectrum. Owing to his condition, he is considered of unsound mind and cannot independently operate a trading account. I am his legal guardian and intend to open a Demat and Trading Account in his name, to be operated by me as guardian, in accordance with SEBI guidelines.
I have referred to SEBI’s “FAQ on Account Opening by Persons with Disabilities”, which permits account opening in the name of a PwD with operation by a guardian, subject to KYC and guardianship requirements.
I have also received the following clarification from Zerodha, the broker with whom I am exploring account opening:
“The child is considered an individual taxpayer, and the income from the account will be assessed in his name, subject to standard income tax slabs.”
My specific queries are:
1. In such a case, who will be legally liable for income-tax obligations arising from trading activities:
> the PwD account holder, or
> the legal guardian who operates the account on his behalf?
2. Will the income (capital gains, dividend, interest, etc.) be:
> assessed entirely in the name of the PwD, or
> clubbed with the guardian’s income under any provision of the Income-tax Act?
3. Are there any special provisions, exemptions, or reporting requirements applicable when:
> the account holder is a PwD (autism), and
> the account is operated by a guardian under SEBI-compliant arrangements?
4. From a compliance and future-dispute perspective, is it advisable to:
> file a separate ITR in the PwD’s name, or
> adopt any additional safeguards or declarations?
Your guidance will help me proceed correctly and compliantly before opening the account.
Thank you for your time and expert advice.
Warm regards,
Bikash Ghosh
(Legal Guardian)
I seek your expert guidance on a specific income-tax issue relating to a proposed Demat and Trading Account for my son, who is a Person with Disability (PwD) suffering from Autism Spectrum Disorder (ASD).
Background:
My son Shounak Ghosh is an adult (major) and is on the autism spectrum. Owing to his condition, he is considered of unsound mind and cannot independently operate a trading account. I am his legal guardian and intend to open a Demat and Trading Account in his name, to be operated by me as guardian, in accordance with SEBI guidelines.
I have referred to SEBI’s “FAQ on Account Opening by Persons with Disabilities”, which permits account opening in the name of a PwD with operation by a guardian, subject to KYC and guardianship requirements.
I have also received the following clarification from Zerodha, the broker with whom I am exploring account opening:
“The child is considered an individual taxpayer, and the income from the account will be assessed in his name, subject to standard income tax slabs.”
My specific queries are:
1. In such a case, who will be legally liable for income-tax obligations arising from trading activities:
> the PwD account holder, or
> the legal guardian who operates the account on his behalf?
2. Will the income (capital gains, dividend, interest, etc.) be:
> assessed entirely in the name of the PwD, or
> clubbed with the guardian’s income under any provision of the Income-tax Act?
3. Are there any special provisions, exemptions, or reporting requirements applicable when:
> the account holder is a PwD (autism), and
> the account is operated by a guardian under SEBI-compliant arrangements?
4. From a compliance and future-dispute perspective, is it advisable to:
> file a separate ITR in the PwD’s name, or
> adopt any additional safeguards or declarations?
Your guidance will help me proceed correctly and compliantly before opening the account.
Thank you for your time and expert advice.
Warm regards,
Bikash Ghosh
(Legal Guardian)
26 January 2026
Income from a Demat/Trading account opened in the name of your son (PwD) will be taxable in his name only, not clubbed with yours. As guardian, you are responsible for operating the account and filing his ITR, but the legal liability for tax rests with the PwD’s PAN. Filing a separate ITR in his name is both mandatory and advisable, with guardian signing on his behalf.
26 January 2026
Tax liability attaches to the PAN holder. Since the Demat/Trading account will be in your son’s name, all income (capital gains, dividends, interest) is legally his.
As guardian, you act as a representative assessee under Section 160 of the Income-tax Act. This means you file and comply on his behalf, but liability is assessed in his name.
You are not personally liable for tax on such income unless you intermingle funds or misreport.
As guardian, you act as a representative assessee under Section 160 of the Income-tax Act. This means you file and comply on his behalf, but liability is assessed in his name.
You are not personally liable for tax on such income unless you intermingle funds or misreport.
26 January 2026
No clubbing provisions apply here. Clubbing under Section 64 applies to minor children or spouse in specific cases. Since your son is a major, his income is assessed separately.
Even though he is of unsound mind, the Act treats him as an assessee, with guardian filing on his behalf.
Even though he is of unsound mind, the Act treats him as an assessee, with guardian filing on his behalf.
26 January 2026
- Section 80U: Your son can claim a flat deduction of ₹75,000 (for disability ≥40%) or ₹1,25,000 (for severe disability ≥80%). Autism Spectrum Disorder is recognized under the RPwD Act, so this deduction applies.
- Section 80DD: As guardian, if you incur expenses for his medical treatment or deposit in approved schemes, you can claim deduction in your own return.
- Reporting: No special exemption on capital gains/dividends for PwD. Normal tax rules apply. But you must disclose guardian operation in the ITR (verification section allows guardian signature).
SEBI-compliant guardian operation is sufficient; no separate reporting requirement under Income-tax Act beyond standard disclosure.
- Section 80DD: As guardian, if you incur expenses for his medical treatment or deposit in approved schemes, you can claim deduction in your own return.
- Reporting: No special exemption on capital gains/dividends for PwD. Normal tax rules apply. But you must disclose guardian operation in the ITR (verification section allows guardian signature).
SEBI-compliant guardian operation is sufficient; no separate reporting requirement under Income-tax Act beyond standard disclosure.
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26 January 2026
File a separate ITR in your son’s name using his PAN. You will sign as guardian in the verification section.
Maintain clear documentation:
Guardian appointment proof (court order or declaration under RPwD Act).
SEBI/DP account opening forms showing guardian authority.
Medical certificate of disability (for 80U claim).
Keep segregated bank accounts for his trading income to avoid disputes.
Maintain clear documentation:
Guardian appointment proof (court order or declaration under RPwD Act).
SEBI/DP account opening forms showing guardian authority.
Medical certificate of disability (for 80U claim).
Keep segregated bank accounts for his trading income to avoid disputes.
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26 January 2026
- Risk: AO may raise query on guardian operation.
- Mitigation: Attach medical certificate + guardian declaration.
- Risk: Clubbing confusion.
- Mitigation: Cite Section 160 (representative assessee) and Section 64 (not applicable to majors).
- Recommendation: Always file separate ITR in PwD’s name, claim 80U deduction, and maintain transparent records.
- Mitigation: Attach medical certificate + guardian declaration.
- Risk: Clubbing confusion.
- Mitigation: Cite Section 160 (representative assessee) and Section 64 (not applicable to majors).
- Recommendation: Always file separate ITR in PwD’s name, claim 80U deduction, and maintain transparent records.
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28 January 2026
Thank you very much, Sir, for the valuable insight. The explanation on how income from a guardian-operated trading account is assessed, and the associated tax obligations, was very clear and helpful.
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28 January 2026
You are welcome.
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