Clubbing of minor's income

There is no provision to avoid tax liability for above query raised by you. you have to clubbed minor income to parent's income.

No,

she can not avoid tax liability

as the interest income is accrued income

and she has to pay tax on that income

& if there is any income by her daughter with her own skill or her daughter is physically challenged than that income will not be clubbed

otherwise all the income, which comes to her without doing any pain for that should be clubbed in her mother's income

and this is my opinion

 AS PER LAW CLUBBING IS TO BE DONE ONLY IF SUCH INCOME IS FROM SOURCE WHICH IS T/F BY PARENTS. IN THIS CASE, PARENTS HAS NOT T/F ANYTHING. THIS IS INCOME FROM FUND RECD BY MINOR CHILD FROM COURT ORDER.

AS PER LAW  IF Where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary to do so.

I.E IN THIS CASE SUCH INCOME SHOULD NOT BE INCLUDED IN MOTHER INCOME.

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OTHER EXPERT'S OPINION ARE ALSO SOLICITED.

My dear Sandeep, clubbing is a provision introduced by Income Tax act so as to ensure that no one can escape from tax liability by transfering  income to his/her relatives.

In the above mentioned case, since the order has been pased by the court ,so no tax liability shall arise on the part of minor's mother.

In the given case the minor can even avoid the tax liability by submitting a form 15G.

The Incomei Not taxable in the hands of the parents. IT IS DIVERSION OF INCOME BY OVERRIDING TITLE. INCOME WILL ACCRUE ONLY TO THE MINOR WHEN SHE BECOMES MAJOR. If the Cort Order isspecific.

Ask the mother to seek clarification u/s 119 from the CIT/CBDT

DISCLIMER : the advice represents  my perception of law. Use it with dicretion at your own risk.

In this case the mother should plead with the court to release the tax liability amount every year from the accrued interest if the same is clubbed with her income.

Otherwise the income should not be clubbed and should be chargeable only on cash basis i.e. the entire income should be chargeable to tax at the time of receipt by the minor. Since the income is more than the threshold limit of Rs. 1,90,000 in case of women assesses form 15G cannot be submitted.

Every income of minor (except in case of handicaps and the income earned by application of minor's skills) are taxable in the parent's hands..

The logic given by some other people that it is clubbed only if it is diverted by parents is not correct. It is always clubbed irrespective of such diversion.

The mother will get deduction of Rs, 1500 u/s 10.

And as u said she bears her daughters education cost, she can claim deduction for that u/s 80C.

Read the Court order carefully:

As per the information given by you:

If the court has ordered that this money will be of the minor and the parent will just be guardian (trustee) of the said amount and that amount be kept seperately in a F.D

Then as per Law a trust of Minor is automatically formed, then no need to add the said income in mothers income. - No clubbing of income provision shall be applicable here.

Then the Minors trust will a seperate entity and Taxed seperately - will get benefit of basic slab exemption and other deductions as well.