phoenixtax December 5, 2021As your child approaches maturity, you’ll face a number of key decisions, some of which are motivated by a desire to assist your child become more self-reliant and responsible. Child labor is prohibited under the Child Labor (Prohibition and Regulation) Act of 1986, which applies to all minors under the age of 18. Minors, on the other hand, can make money from a variety of means.
Minors can get income through bank account savings, fixed deposits, and other assets made by their parents in addition to salary from employment.
What is a minor?
In India, a minor is someone under the age of eighteen. According to clause 3(1) of the Indian Majority Act 1875, every person residing in India must reach the age of majority when he or she turns 18 years old.
What are the different ways a minor can make money?
A minor can make money in two ways:
- They can earn money by using their skills or specific expertise, or by participating in extracurricular activities.
- Fixed Deposits and savings accounts in their name are available through their parents.
Is it necessary for minors to pay taxes?
Any sum received by a minor is included in their parents’ income under section 64(1A), and the taxes on that income are the same as the taxes on their parents’ income.
It will not be added to the parent’s income if the minor’s monthly income is less than Rs 1,500. If the minor’s monthly income exceeds Rs 1,500, the parents will be required to pay tax on that income, which would be classified as parent income. A parent can claim a Rs 1,500 exemption for each minor kid (maximum of two children) whose income is combined.
There are a few rules to follow when adding a minor’s earnings to his or her parent’s assets:-
- If both parents earn money, the minor’s earnings will be added to the parent’s earnings, with a preference given to the parent with the higher earnings.
- The income of the minor is added to the income of the parent who has custody in the case of divorced parents.
- If the youngster is an orphan, he or she will need to file a separate income tax return. The salary inclusion benefit is not available to a guardian.
- If a child is disabled, the child’s income is not added to the parent’s income under Section 80U of the Income Tax Act 1961. When a child has a disability of more than 40% due to conditions such as mental illness, locomotor disability, hearing impairment, poor eyesight, or blindness, the child is called impaired.
- If a minor makes money through his or her specialized abilities, aptitude, knowledge, or manual labour, such money is taxable to the minor.
Is it possible for a minor to file a tax return?
For children, there is no specified age restriction for filing income tax returns forms. Their age is irrelevant, but their income is. The minor children’s income tax returns are calculated using their savings, investment income, or income obtained through work, acting jobs, show winnings, and other sources.
If the minor’s income is not combined in the hands of his or her parents, they will be required to submit income tax forms. As required by law, minors who earn money must report to the authorities by completing an Income Tax Return in the authorized form using one of the following methods:
In the ITR of the minor; or in the income of one of the parents with a greater income.
For a minor, what are the applicable slab rates?
The following are the income tax slabs that apply to minors in FY 2020-21 (AY 2021-22):
| Income Tax Slab | Tax Rate (Existing Scheme) | Tax Rate (New Scheme) |
| Up to Rs 2.5 lakh | Nil | Nil |
| Rs 2.5 lakh to Rs 5 lakh | 5% (Tax rebate of Rs 12,500 available under section 87A) | 5% (Tax rebate of Rs 12,500 available under section 87A) |
| Rs 5 lakh to Rs 7.5 lakh | 20% | 10% |
| Rs 7.5 lakh to Rs 10 lakh | 20% | 15% |
| Rs 10 lakh to Rs 12.5 lakh | 30% | 20% |
| Rs 12.5 lakh to Rs 15 lakh | 30% | 25% |
| Rs 15 lakh and above | 30% | 30% |
Minors who want to file an income tax return must have the following essential documents: –
- PAN Card Income Details, such as cash received, checks received, and bank deposits
- Details about savings, such as interest on fixed deposits, savings interest, contributions to mutual funds, and so forth. Active Mobile & Email ID.
- Login information for the e-filing portal
- Bank information has been updated (Name, IFSC Code & Account No.).
How to file income tax return for minors?
Children can be taught how to pay their taxes by their parents or guardians. However, it might be too early for children to comprehend the gravity of the situation or the level of dependability required. As a result, the parent is required to pay his or her child’s income tax on their behalf.
If the child’s income exceeds Rs.1500, the child’s income must be combined with the parent’s. Consider a few scenarios in which the child’s income is combined with the income of the parents. When filing taxes in the name of a kid who receives earned or unearned income, there are a few exemptions and restrictions to be aware of. If both the mother and father are working members of the family, the minor’s earnings will be added to the earnings of the parent with the greater earnings.
If the parents’ divorce, the child’s income is transferred to the parent who has custody of the child. When a child has any of the disabilities listed in Section 80U, the child’s income is not combined with the parent’s. (A child is classified differently abled if he or she has more than 40% of the time blindness, locomotor disability, hearing impairment, poor eyesight, or mental illness.)
If both parents are deceased, the child must file a separate income tax return. In this instance, however, a guardian is not eligible for the wage inclusion advantage.
Always assist your child in learning his or her citizenship responsibilities. It is recommended that the child have a PAN card. Plan ahead of time to pay income tax to your child if he or she earns money. You can then take advantage of the benefits by paying your child’s income tax.
For filing income tax return in Tambaram, Chennai
