Income Tax Rules For Minors IT Act Section 64 (1A) Income Tax On Orphan

Do children also have to pay direct tax? Know what the rule is.

Income Tax Rules: The government has banned child labour under the Child Labor Prohibition and Regulation Act of 1986. Still, income tax rules are effective on minors.

Direct tax Rules For Minors IT Act Section 64 (1A) Direct tax on Orphan Kaam Ki Baat: Do children also have to pay direct tax? Know what the rule is.

Orphan and handicapped children do not get exemptions in the Income Tax Act but have got relief.

Income Tax on Children: According to Section 61 (1A) of the Direct Tax Act (Income Tax Act, 1961), all the money received by minors comes under the purview of income tax. Investments, savings accounts, fixed deposits etc. made in the name of minors are taxed. Tax is also levied on the salary of child actors working in films and advertisements.

When is income tax levied on minors?

If a child below 18 years of age earns less than Rs 1500 per month, then tax is not levied on him. If the income is more than Rs 1500 per month, then tax will be levied on it.

How is tax levied on the income of minors?

The income of children from their salary or investments made in their name, etc. is added to the income of their guardian, and the indirect tax is deducted from the total income of the guardian as per the prescribed tax slab.

If both the parents work and earn income, then tax is calculated by adding the amount of the child’s income to the income of the guardian whose income is higher.

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If the parents are divorced, then the child’s income will be added to the income of the guardian in whose custody the child is, even if the source from which the child is earning income is earned by the other guardian.

If the child is an orphan, he will have to pay income tax on his own. It will not be added to the income of his guardian.

If a child is handicapped, then under Section 80U of the Direct Tax Act, his income will not be added to the income of any guardian. In this way, the child’s income will be less, and it will probably not come under the tax net.

Any minor will be considered handicapped if he has any mental illness, physical illness, deafness, weak eyesight, or blindness of more than 40 percent.