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minor's PAN and income

ramesh agrawal (business) (179 Points)

18 September 2010

I and my minor son hold a plot jointly. I , from my income , constructed a building to give on rent. I want my son to receive half the rent. Can my son receive half the rent? Can he apply for a PAN number ? What will be the tax treatment of his income from rent ?

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14 Replies

Rajesh (Student) (113 Points)
Replied 18 September 2010

You may deploy the above circumstances and your son can recieve rent, but clubbing provisions shall be attracted under the Act, whereby his income shall be included in your income(or your spouses' income, whichever higher) for calculation of tax liability. You may apply for PAN though. It is permissible for a minor to apply a PAN.

1 Like

gaurav behal (CA-IPCC) (217 Points)
Replied 18 September 2010

ya.....a minor can apply for PAN. and in the case of income can b received by minor. but after receiving income then the provision of sec 64(1) apply there for clubbing of income. and that income is clubbed in his parents whose income is more.

1 Like

Abhishek Jain (RisK Manger) (231 Points)
Replied 18 September 2010

Friends i think in this case section 60 of Income Tax Act 1961 will apply which states "All income arising to any person by virtue of a transfer ⁶⁸ whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income"

In present case property belongs to mr. ramesh and he just wants to transfer half of rentarising out of it to his minor son.

so in my opinion entire income will be taxable in his hand and clubbing provisions of section 64(1) of Income Tax Act 1961 will not apply.

As far as PAN card for minor is concerned yes minor can apply for PAN card.

correct me if i am wrong

JINESH SHAH (PRACTICING CA) (151 Points)
Replied 18 September 2010

i think clubbing provison will apply..

Rachana (CA Final) (434 Points)
Replied 18 September 2010

YES

definitely clubbing provision will be attracted ...

CA SATYAM SHRIVASTAVA (CHARTERED ACCOUNTANT) (78 Points)
Replied 18 September 2010

ya! .... its sure that it will attract clubbing provision.

Abhishek Jain (RisK Manger) (231 Points)
Replied 18 September 2010

clubbing provision would had applied if income belonged to minor son.but here income is of parent and he is diverting it to minor son.

its like this income of parent transfered to minor son then again that income is clubbed to parent's income

kaushik (service) (125 Points)
Replied 18 September 2010

In case the income of an individual includes the income of his minor child in terms of sec 64(1 A) , such individual shall be entitled to an exemption of Rs 1500/- in respect of each minor child if the income of such minor child includible under sec 64(1A) exceeds that amount.

J.MEENAKSHI SOWBARNIKA (Chartered Accountant) (92 Points)
Replied 18 September 2010

ya your son can get a pan card and he can receive half of the rent .but anyway it will be clubbed & taxed to

his parents (whose income is higher)

Santosh (Student ( Final Year - New )) (348 Points)
Replied 18 September 2010

Originally posted by : Abhishek Jain
	Friends i think in this case section 60 of Income Tax Act 1961 will apply which states "All income arising to any person by virtue of a transfer 68 whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income" In present case property belongs to mr. ramesh and he just wants to transfer half of rentarising out of it to his minor son. so in my opinion entire income will be taxable in his hand and clubbing provisions of section 64(1) of Income Tax Act 1961 will not apply. As far as PAN card for minor is concerned yes minor can apply for PAN card. correct me if i am wrong

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 18 September 2010

Hi Dear,

First of all, there is no provision which prohibit a minor from obtaining a PAN Card. Thus, a Minor can validly apply for PAN No. and Get the PAN Card in his name.

Secondly, As per Sec 64(1A), if the minor son/ daugher received the income other than by application of his/her skill, specialised knowledgeor manual work, then all the income in hands of Minor should be clubbed in hands of his/her parent whose Total Incomeis higher. This clubbing provision would also not attracted in the case where Minor son/ daugher suffered from any of the disability mentioned under section 80U even though income not earned through manual work or by application of his skill, specialised knwoledge.

Thirdly, if the income of the minor included in the income of parent, then he willl get the deduction u/s 10(32) upto Rs.1500 per minor child or income clubbed whichever is lower.

Regards,

Manoj