Wealth tax query

Asset held by a Minor Child: Any asset held by a minor child, will be clubbed in the hands of that

parent, whose net wealth excluding minor’s wealth is greater. But in case the marriage of the parents

does not subsist, then the wealth of minor child will be clubbed in the hands of that parent who

maintains the child (in case if both the parents are not alive, then clubbing provisions will not be

attracted).

Note: The term “minor child” includes, a step child, as well as an adopted child, but does not include a

child resulting out of an illegal marriage.

3 Exceptions: Clubbing Provisions shall not apply to the wealth of minor child in the following three

circumstances:

(a) Net Wealth of a minor child suffering from a disability of a nature specified in Sec. 80U of the

Income Tax Act, 1961

(b) Net wealth of a minor married daughter,

work or any activity involving application of his skill, talent or specialized knowledge. But in case if

the minor child sells off such non-clubbable asset and acquires another taxable asset out of the sale

proceeds of such non-clubbable asset, then such newly acquired asset will not enjoy the benefit of

such exemption and will be clubbed in the hands of either of the parents as enumerated above.

Note:

(1.) In all the three such cases the impugned asset, however, will be taxable in the hands of minor child

himself. (only clubbabilty will be lost, the taxability of the asset will not be lost)

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