Do minors need to pay taxes? Here's all you need to know

Do minors need to pay taxes? Here's all you need to know

If the child is under the age of 18, who is referred to as a minor, and has an earning over the taxable slab, then liability comes under the guardian/ parent to file taxes

Amit GuptaUpdated: Saturday, June 18, 2022, 10:52 PM IST
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There was a time when children didn’t have many opportunities and choices. Comparatively, teenagers today are interrupted with several unique jobs that offer good earnings as well. As you can see around there are many young entrepreneurs in the industry.

If the child is under the age of 18, who is referred to as a minor, and has an earning over the taxable slab, then liability is of the guardian/ parent to file the taxes. There is no age bar for filing income tax returns.

When it comes to filing the tax, a minor can also file, if their earning amount is over Rs 15,000 per month. Through this article, you will get to know in what situation a parent can claim the income tax return of their child.

Minor has a kind of income receivable

A minor can file two kinds of income that can be named as: Earned money and unearned money.

Earned money: When a child, who is a minor, takes part in any competition, TV show, or sports tournament and acquires the allocated prize in sum. If the minor child has some part-time jobs or may be running his/her own business, then that could be called an earned money.

Unearned money: If that minor child does not obtain money from hard work or actions, but earns money as a form of a gift from any event from their well-wishers like relatives, grandparents, family friends. The income thus gained by them is categorized into unearned money.

What does ‘Clubbing Money’ indicate?

At a point, merging parents' earned money with their child’s earned money will not be applicable once the latter has reached a major status. Here, the term ‘clubbing the money’ is considered as the process where collecting the income of the parents is done along with their children.

As per the Income Tax Act, if a child has earned from their respective business or any part-time job, then the obtained amount can be merged with earnings of their guardians. But in the case where the parents are salaried, then the earned amount of the child can be merged with whoever is earning more among the parents.

Do I have to file Income Tax Return for my child in case I claim for her/him? There are two scenarios here:

The child is under the age of 18: A child who is earning has to file income tax even if under 18 years of age. However, as long as the child is the responsibility of the parent, then his/her guardian can also file income tax on behalf of the child.

Let’s understand this if your child is still not counted under the majority status and receives an income above Rs 1,500 monthly. On account of this, the parents have to pay the taxes on behalf of the child.

There are few circumstances where if the child falls under minority, then the parent wouldn’t claim the child’s income tax returns (ITR).

The child is above 18 years of age: A child who is above 18 years of age will have to file income taxes. S/he will not be any more counted as the parents’ responsibility and on that note, they to have to file income taxes of their own. If your child has passed through the majority age, then as a parent, you cannot claim this ITR.

(Amit Gupta is Managing Director, SAG Infotech)

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