All income which arises or accrues to the minor child shall be clubbed in the income of his parent (Sec. 64(1A), whose total income (excluding Minor’s income) is greater. However, in case parents are separated, the income of minor will be included in the income of that parent who maintains the minor child in the relevant previous year.
Exemption to parent [Sec10 (32)]
An individual shall be entitled to exemption of Rs. 1,500 per annum (p.a.) in respect of each minor child if the income of such minor as included under section 64 (1A) exceeds that amount. However if the income of any minor child is less than Rs. 1,500 p.a. the aforesaid exemption shall be restricted to the income so included in the total income of the individual.
When Section 64(1A) is not applicable
In case of income of minor child from following sources, the income of minor child is not clubbed with the income of his parent.
• Income of minor child on account of any manual work.
• Income of minor child on account of any activity involving application of his skill, talent or specialized knowledge and experience.
• Income of minor child (from all sources) suffering from any disability of the nature specified under section 80U
S. 5 & 64(1A) of IT Act, 1961—Income—The year in which enhanced compensation is received is the year of taxability and the interest under s. 28 of the Land Acquisition Act, 1894 on enhanced compensation is a part of enhanced compensation, therefore, interest on enhanced compensation is taxable in the year of receipt—CIT vs. Laxman Swaroop Goel (2011) 242 CTR 554 (P&H)
Reference: – As Per Section 64(1) (A) of the Income Tax Act 1961
Income of individual to include income of spouse, minor child, etc.
64.(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child [, not being a minor child suffering from any disability of the nature specified in section 80U]
Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any—
(a) Manual work done by him; or
(b) Activity involving application of his skill, talent or specialised know-ledge and experience.
Explanation.—for the purposes of this sub-section, the income of the minor child shall be included,—
(a) Where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or
(b) Where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year,
and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.