Filing ITR for Minor Child’s Income: Rules & Tax Implications
- Rajesh Kumar Kar
- Dec 7
- 9 min read
Income earned by a minor child in India is taxed under specific rules that depend on how the income is generated. The Income Tax Act outlines clear provisions on when a minor’s income must be clubbed with a parent’s tax return and when the child must file a separate ITR. These rules apply to common income sources such as bank interest, gifts, investments, or earnings from a child’s talent or business activity. Understanding these provisions ensures correct reporting, prevents penalty exposure, and helps families manage taxes effectively. Platforms like TaxBuddy simplify this process by guiding taxpayers based on the applicable rules.
Table of Contents
Understanding Who Qualifies as a Minor Under Income Tax Rules
A minor is any individual who has not completed 18 years of age as per Indian income tax regulations. However, a child who turns 18 during the financial year is treated as a major for tax purposes from the date of birth itself. Additionally, children with disabilities covered under the Persons with Disabilities Act may still be considered minors for tax provisions related to clubbing of income. Understanding this classification is essential because taxability rules differ significantly for minors compared to adults.
When a Minor’s Income Is Clubbed With Parent’s Income (Section 64(1A))
Under Section 64(1A), most types of income earned by a minor are added to the income of the parent whose total income is higher. This includes interest from savings, fixed deposits, investments made in the minor’s name, and gifts received beyond the exempt limits. The aim is to prevent parents from diverting income to a minor to reduce their tax liability. Once clubbed, the income is taxed at the parent’s slab rate. Only one parent—typically the one with the higher income—can include the minor’s income for tax purposes during a financial year.
When a Minor Must File a Separate ITR
A minor must file a separate ITR only under two conditions:
When the income earned is from the minor’s personal skill, such as acting, singing, sports, freelancing, or any specialized talent.
When the minor earns income through manual work or entrepreneurial activities permitted under law.
In these cases, the income is taxed in the minor’s name and not clubbed with the parent’s income. If the minor’s income exceeds the basic exemption limit applicable under the chosen tax regime, a separate ITR becomes mandatory.
Tax Implications for Minor Child’s Income
Income of a minor that is clubbed with a parent is taxed at the parent’s tax slab. A special exemption of ₹1,500 per child is available under Section 10(32) when clubbing provisions are applied. If a minor files a separate return due to income from skills or manual work, the standard tax rules apply, including basic exemption limits and deductions available under the chosen regime. Family pension received by a minor is taxed under “Income from Other Sources” with a separate deduction of ₹15,000 or one-third of the pension, whichever is lower.
How to File ITR for Minor Child’s Income
When a minor’s income is clubbed with a parent, the parent must report the amount in the “Income from Other Sources” schedule along with the Section 10(32) exemption. If the minor needs to file a separate ITR, the parent must act as a guardian during e-verification, signatory approval, and PAN usage. Depending on the income type, the ITR form may differ—simple interest or savings income can be reported in ITR-1, whereas income from business, profession, or capital gains may require ITR-2 or ITR-3.
Documents Required for Filing ITR for Minor Child
Filing minor income requires accurate documentation, including: • PAN card of the minor (mandatory for separate filing) • Birth certificate for age verification • Bank statements showing earnings in the minor’s account • Income certificates for skill-based income • Form 16A for TDS, if any • Investment proof and gift deeds • Guardian’s KYC details for verification
These documents ensure proper assessment and prevent mismatches in AIS or TIS.
Tax Exemptions and Deductions for Minor Child Income
A minor whose income is clubbed with a parent receives an exemption of ₹1,500 per child under Section 10(32). If filing separately, minors can claim deductions available to individuals only if the income is from their own skill-based activities. This includes eligible deductions under Section 80C, Section 80D or any other applicable provision. Income from investments, gifts, or deposits generally does not attract additional deductions when clubbed with parental income.
Tax Implications on Gifts and Investments Held in a Minor’s Name
Gifts received by a minor above ₹50,000 in a financial year (other than from relatives) are taxable unless they fall under exempt categories such as inheritance or specific ceremonies. The income earned from these gifted funds—interest, dividends, capital gains—is clubbed with the parent. Investments opened in the minor’s name such as FDs, RDs, mutual funds, or savings accounts are fully permissible, but their returns are subject to clubbing rules unless derived from the minor’s own skills.
Filing Minor Income Through Online Platforms and Government Portals
Income from a minor can be filed either through the official income tax e-filing portal or simplified platforms. While the government portal works, it often requires manual entry and careful selection of clubbing provisions. Tax platforms automate detection, split income accurately between the parent and child, and ensure all deductions are correctly applied. Filing online also enables faster processing, e-verification, and real-time status tracking.
How TaxBuddy Helps With Filing ITR for Minor Child’s Income
TaxBuddy simplifies minor income filing by automatically identifying income types that need clubbing and those that require separate filing. The platform checks compliance with Section 64(1A), applies the ₹1,500 exemption where eligible, and ensures documentation matches AIS/TIS reporting. Expert-assisted options help parents avoid common mistakes, especially in cases involving talent-based income, high-value gifts, or multiple investment accounts.
Common Mistakes to Avoid When Filing ITR for Minor Income
Parents frequently make several unintentional errors while filing ITR for income earned by their minor children, and these mistakes often lead to notices, AIS mismatches, or incorrect tax calculations. One of the most common issues is ignoring interest earned in the child’s bank account or from investments made in their name. Even if the amount seems small, the Income Tax Department captures it through AIS, and failing to report it can create discrepancies. Another mistake arises when parents claim deductions such as 80C or 80TTA against income that is supposed to be clubbed with the parent’s income. Since minor income (except in specific cases) gets added to the income of the parent with the higher taxable income, deductions cannot be claimed independently in the minor’s name.
Parents also tend to choose the wrong ITR form assuming the child must file separately, when in most cases, the clubbing provisions make the parent responsible for reporting the income. Many forget the ₹1,500 exemption available per child under Section 10(32), which reduces the tax impact of clubbed income. Documentation is another area where lapses occur. Gifts received by minors—whether from relatives or others—must be supported with proper proof in case the tax department seeks clarification. Investment records, bank statements, and gift deeds should be maintained carefully to avoid complications later.
During e-verification, failing to update and match the guardian details with the records on the income tax portal can create processing delays. This often happens when the bank account is opened long before the child’s PAN or guardian details are updated. To avoid such errors, parents should ensure accurate reporting, maintain proper documentation, and review AIS/TIS carefully before filing. Platforms like TaxBuddy streamline the process by identifying clubbing-related issues early and guiding parents through correct reporting.
Conclusion
Minor children can earn income legally, but understanding how that income is taxed is essential to avoid penalties, mismatches, and compliance errors. Whether income is clubbed with a parent or requires a separate ITR, proper reporting helps maintain transparency and accuracy. Using structured digital platforms ensures error-free filing and prevents issues arising from incorrect clubbing or document mismatches.
FAQs
Q1. Who is considered a minor for income tax purposes? A minor is any individual below 18 years of age as per Indian tax laws. This includes children who are yet to turn 18 on the last day of the financial year. A child who is 17 years and 364 days old is still treated as a minor. Once the child completes 18 years, their income is assessed independently, and the rules for clubbing their income with parents no longer apply.
Q2. Is the minor’s income taxable in India? Yes, a minor’s income is taxable in India, but how it is taxed depends on the source of income. If the income arises from investments, gifts, deposits, or other passive sources, it is generally clubbed with the income of the parent with the higher taxable income. If the minor’s income exceeds the basic exemption limit or falls under any taxable category, it must be reported in the Income Tax Return of the responsible parent.
Q3. What is clubbing of income for a minor child? Clubbing refers to the process of adding a minor child’s income to the income of one of the parents for tax calculation. Under Section 64(1A) of the Income Tax Act, income earned by a minor (other than income from manual work or special skills) must be clubbed with the income of the parent whose total income is higher. A standard exemption of ₹1,500 per child per year is allowed when clubbing applies.
Q4. Can a minor file their own ITR? A minor can file their own ITR if the income is earned through manual work, artistic skills, or technical talent—such as acting, singing, sports, or freelancing. In such cases, the income belongs to the child directly and is not clubbed with parental income. If the minor’s taxable income exceeds the basic exemption limit, they must file a return using an appropriate form such as ITR-2 or ITR-3, depending on the nature of income.
Q5. How does TaxBuddy help with filing a minor’s income? TaxBuddy simplifies minor-income filing through guided workflows, pre-filled data, and real-time assistance. The app identifies whether the minor’s income should be clubbed with the parent or filed separately. It also ensures correct reporting under relevant sections, applies eligible exemptions, and prevents errors that commonly lead to notices. Parents can upload documents, track filing status, and receive expert support throughout the process.
Q6. What types of income earned by a minor are not clubbed with parents? Income earned through the minor’s own efforts—like performing arts, sports achievements, coding projects, modelling assignments, or any technically skilled work—is not clubbed. This income is treated as the minor’s independent income, and the child may need to file their own return. Scholarships received by minors are fully exempt and do not require clubbing.
Q7. Are gifts received by a minor taxable? Yes, gifts to a minor are taxable if their value exceeds ₹50,000 in a financial year, unless they come from “relatives” as defined under the Income Tax Act. Gifts received on occasions such as birthdays or festivals are also exempt if given by relatives, but gifts from non-relatives may be taxed and clubbed with the parent’s income.
Q8. How are investment returns in the name of a minor taxed? Interest from bank deposits, fixed deposits, mutual funds, or any investment made in a minor’s name is normally clubbed with the higher-earning parent. After clubbing, the parent is allowed a deduction of ₹1,500 per child under Section 10(32). Parents must report such income under “Income from Other Sources” in their return.
Q9. Can a parent avoid clubbing by transferring money to the minor? Transferring money does not prevent clubbing. Even if the funds are gifted and invested in the child’s name, any income arising from such investments must still be added to the parent’s income. Clubbing rules are specifically designed to prevent tax avoidance by shifting investments to minors.
Q10. What happens when the minor turns 18? Once the child turns 18, clubbing ends automatically. From that year onward, the income earned in their name—whether from investments, deposits, or employment—is taxed in their own hands. They can claim deductions, file their own ITR, and benefit from the basic exemption limit available to adult taxpayers.
Q11. Is family pension received by a minor taxable? If a minor receives family pension after the death of a parent, it is taxable in the hands of the minor but reported through the guardian. Family pension receives a standard deduction of the lower of ₹15,000 or one-third of the pension amount. Since the income belongs to the minor, clubbing rules apply, unless the pension is tied to the child’s personal skill-based service (rare situations).
Q12. How should minor income be reported correctly to avoid AIS mismatch and notices? Parents must report minor income in the correct section of the ITR and ensure it matches the information in AIS, TIS, and Form 26AS. Any mismatch—such as unreported interest income, gifts, or investment returns—may trigger a notice. TaxBuddy helps parents verify AIS entries, cross-check sources of income, and ensure accurate reporting to avoid discrepancies and penalties.
