Clubbing of income & tds

Originally posted by : Smita Baburao Udgiri
	When the interest on FD income of minor is clubbed in the hands of his/her parents, can an assessee(parents) avail the exemption u/s 10(32) alongwith claiming TDS u/s 194A. or vice versa.

The income of the minor child shall be included,
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(a) Where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income of the minor child) is greater; or
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(b) Where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year.

Exemption u/s 10(32) is available to the extent of Rs. 1,500/- per child.

For Credit of TDS:-
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Parent can file a declaration with the bank at the beginning of the year, containing parent's Name, Address, PAN and reasons for giving credit to such person (in this case stating that the children’s income will be taxable in parent's hand). The bank will have to take notice of this declaration and show that tax has been deducted from parent's income. Parent should, therefore, be able to claim credit for such TDS on children’s investments.
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Refer Rule 37BA of the Income Tax Act 1961.

For your reference, I am pasting the same below.
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37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
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2)(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee :
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Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).
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(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
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(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.