I have deposited ₹5 lacs in a minor daughter's account with instructions to operate the account by natural guardian. Who has to pay income tax on interest earned on the deposit as the minor has a PAN in her name..
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Income tax on income earned by minor
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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.
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