Income Tax Return for Minor Child

Most people believe that minors (individuals below the age of 18) are not required to file an income tax return. While this is generally true, there are specific situations where a minor’s income becomes taxable, and filing an ITR becomes necessary.

This guide explains when a minor’s income is taxed, how it is treated under Indian tax laws, and who is responsible for filing the return.

Who is Considered a Minor Under Income Tax Rules?

As per the Income Tax Act, a minor is an individual who is below 18 years of age as on the last day of the financial year (i.e., 31st March). In most cases, the income of a minor is clubbed with the income of the parent, but there are exceptions.

What is Earned and Unearned Income in Case of Minors?

When it comes to taxation of minors, not all income is treated the same way. The Income Tax Act differentiates between earned income and unearned income, and this distinction is important for understanding when income will be clubbed with the parent’s income and when the minor needs to file a separate Income Tax Return.

Earned Income

Earned income refers to the money a minor receives by using their own skill, talent, or effort. This includes income from activities where the minor is directly involved and works independently to generate earnings.

Examples of earned income:

• Payment received for participating in sports, competitions, or shows
• Income from acting, singing, or other performance-based work
• Freelancing or online income earned by teenagers
• Business or startup income in the minor’s own name
• Salary from a part-time job or internship

Such income is treated as earned by the minor through personal skill, and is not clubbed with the parent’s income. A separate return should be filed on the minor’s behalf in these cases.

Unearned Income

Unearned income is the income a minor receives without actively working or providing services. It typically comes from passive sources or financial arrangements made by the parents or relatives.

Examples of unearned income:

• Interest earned from fixed deposits or recurring deposits
• Gifts from grandparents, relatives, or family friends
• Returns from investments made by parents in the minor’s name
• Interest on savings bank accounts held in the name of the minor
• Income generated from assets transferred by parents to the child

This type of income is generally clubbed with the income of the parent who has the higher total income, unless the minor qualifies for an exemption under specific conditions (like having a disability or earning through personal skill).

Is It Mandatory for a Minor Child to File an Income Tax Return?

A minor is required to file an income tax return if their total income exceeds the basic exemption limit. Though minors are generally not taxed directly, the Income Tax Act has specific provisions for how their income should be treated.

How a Minor’s Income is Taxed

There are two ways a minor’s income can be reported:

• Filed in the Minor’s Own Name: If the income is earned through their personal skills, such as acting, sports, or business, the minor is liable to file ITR independently.
• Clubbing with Parent’s Income: As per Section 64(1A), other income received by a minor (like interest or gifts) is added to the income of the parent who earns more. Tax is then paid accordingly.

Exemption Limit of ₹1,500 per Child

• If income is up to ₹1,500 per year: It is exempt under Section 10(32) and not added to the parent's income. This is allowed for up to two children.
• If income exceeds ₹1,500 per year: The excess amount is clubbed with the parent's income and taxed. However, parents can still claim ₹1,500 per child as a deduction.

So, filing is necessary only if the minor’s taxable income, either independently or clubbed, crosses the prescribed limit.

What Documents Are Required for a Minor to File Their Own Return?

• PAN Card
• Income details (cash received, cash deposits in a bank, etc.)
• Details of savings like fixed deposit interest, savings interest, contribution in funds, etc.
• Active Mobile & Email ID
• E-filing portal login details
• Bank Details