Income tax on income earned by minor

Interest on deposit in a minor child’s account is generally clubbed with the income of the parent having the higher total income u/s 64(1A). Minor having a PAN does not change this position. Since this is bank interest and not income from the minor’s own skill/manual work, tax is payable by the parent in whose hands clubbing applies. Relief u/s 10(32) of ₹1,500 per child or actual clubbed income, whichever is lower, can be claimed.

Natural guardian will pay tax.

Clubbing provisions apply.

This is a textbook Sec 64(1A) clubbing question — minor's PAN is irrelevant. All income arising to a minor (except income from manual work, or from skill/talent/specialized knowledge) is clubbed in the hands of the parent with the higher total income, per Sec 64(1A). Interest on a bank deposit is passive income, so it clubs. You then get a small exemption under Sec 10(32) — ₹1,500 per minor child or the actual clubbed amount, whichever is lower. One caveat: if the interest arises from income originally earned by the minor's own skill (not the case here), clubbing doesn't apply. Also note Sec 64(1A) clubbing applies before computing the parent's slab, so it can push the parent into a higher bracket.

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