INcome of the minor

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.

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.

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. 

Dear Ramakrishna,

Since she would be earning interest of around 1.20 lacs then I don't think she will qualify for the definition of Dependent...

Interest income will be taxable in the hands of ur sister.

It is advisable not to show her as Dependent otherwise in future ur cousin could run in problems.......

Thank u Mr.Amir  throwing light on the issue.   Thanks for the forum members.

But interest thereon will be clubbed in the income of ur cousin sister. You can claim benefit of exemption of Rs 1500 per child.

You can not consider sister as dependent.
 

a