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T. Banusekar

I HAVE invested money in the NSC VIII issue in my minor child's name. Please clarify in whose hands the interest income from the investment will be clubbed during the minority of the child?

Rajesh Jain

Reply

The interest income will be clubbed either in your hands or in the hands of your wife, whosever's total income is higher. Under Section 64(1A) of the Income-Tax Act, all incomes of a minor child will be clubbed in the hands of the parent whose total income is higher. Once the income of a minor child is clubbed in the hands of one parent it shall continue to be clubbed in the subsequent years in the hands of that parent unless the assessing officer (AO) is satisfied, after giving the other parent an opportunity of being heard, that the income is to be clubbed in the hands of that other parent. This will be the case if the marriage of the parents subsists. If the marriage of the parents does not subsist, the income of the minor child will be clubbed in the hands of the parent who maintained the minor child in the previous year.

The income of a minor child will not be clubbed in the hands of the parent if the income arises or accrues from manual work done by the child or from any activity involving application of his skill, talent or specialised knowledge and experience.

Income of a minor child suffering from a disability referred to in Section 80U of the Act will also be not clubbed in the hands of the parent.

(Mail your queries to taxtalk@thehindu.co.in or by post to Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.)

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