Question 1 (d)
Clubbing of a minor child's income under section 64(1A), with a computation for X, Mrs. X and their child (as set, 1961 Act, AY 2022-23)
5 marks
- Time to write
- About 10 minutes
From an older CBCS paper
Question
Question 1 (d) · 5 marksAttempt any three questions from the 6 questions given below:
- Explain the provisions relating to clubbing under section 64(1A) with respect to the Income of a Minor child.
Using the details given below, compute the income of X, Mrs. X and A (who is their minor child):
| Particulars of Income | X (Rs.) | Mrs. X (Rs.) | A (Rs.) |
|---|---|---|---|
| Salary (after the Standard deduction) | 18,00,000 | -- | -- |
| Other Sources | -- | 18,50,000 | --- |
| Income earned from acting | 50,000 | ||
| Gift received from friends | 1,200 | ||
| Gift received from relatives | 30,000 |
Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2022-23 (previous year 2021-22), with the dates as printed. Q1 is "any three of six" (15 marks); this slot is item (4). The table is printed with empty cells for X and Mrs. X in the last three rows.
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- any threeThe paper asks for any 3, and this is one of them. Only 3 are marked: a fourth earns nothing.
- computeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Provisions of section 64(1A), the parent chosen, the exceptions and section 10(32) 2½ marks 4 min
- 2 Treatment of the acting income and the two gifts 1½ marks 2 min
- 3 Total income of X, Mrs. X and A 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Short on time? Step 1 carries 2½ of the 5 marks: guard its minutes.
Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Section 64(1A): the provisions
- The rule. Whatever income arises or accrues to a minor child is added to the total income of the parent (section 64(1A)). The child is not assessed separately on it; the parent pays the tax.
- Which parent. While the parents' marriage subsists, the income goes to the parent whose own total income, before the clubbing, is the greater. If the marriage has ended, it goes to the parent who maintains the child in the year. Once it has been clubbed with one parent, later years' income stays with that parent unless the Assessing Officer, after giving that parent an opportunity of being heard, decides otherwise (Explanation to section 64(1A)).
- Income not clubbed. The child's income from manual work, or from an activity that uses his own skill, talent or specialised knowledge and experience, is not clubbed (proviso to section 64(1A)). Nor is the income of a minor child who has a disability of the kind described in section 80U.
- Exemption for the parent. Where income is clubbed, the parent may exempt up to ₹1,500 of it for each minor child (section 10(32)); any excess is taxed in the parent's hands. The exemption is not open to a parent who opts for the new regime of section 115BAC for assessment year 2022-23: his or her total income is computed without any exemption under section 10(32) (section 115BAC(2)(i), inserted by the Finance Act, 2020, section 53), so the whole of the clubbed income is added. Here nothing is clubbed, so section 10(32) does not affect the figures.
- Scope. Income includes income from assets the child received as gifts and income from investments made with such money; but a sum that is not income at all (for example a gift that section 56(2)(x) leaves out) is not clubbed.
| Receipt of A | Treatment | ₹ |
|---|---|---|
| Income from acting | earned by his own talent and skill: not clubbed; A's own income (proviso (b) to section 64(1A)) | 50,000 |
| Gift from friends | money received without consideration is taxed only when the year's total exceeds ₹50,000 (section 56(2)(x)); ₹1,200 does not | Nil |
| Gift from relatives | a gift from a relative is outside section 56(2)(x) | Nil |
| Income to be clubbed with a parent | Nil |
Had any income been clubbable, it would have gone to Mrs. X, whose own income (₹18,50,000) is greater than X's (₹18,00,000).
| Particulars | X (₹) | Mrs. X (₹) | A (₹) |
|---|---|---|---|
| Income under the head Salaries (after the standard deduction) | 18,00,000 | — | — |
| Income from other sources | — | 18,50,000 | — |
| Income from acting (A's own) | — | — | 50,000 |
| Income of A clubbed (section 64(1A)) | — | Nil | — |
| Total income, assessment year 2022-23 | 18,00,000 | 18,50,000 | 50,000 |
A's ₹50,000 is his own income and is assessed in his own hands; it is below the basic exemption limit of ₹2,50,000 (Finance Act, 2022, First Schedule, Part I, Paragraph A), so no tax is payable on it.
Where the 5 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Provisions of section 64(1A), the parent chosen, the exceptions and section 10(32) | 2.5 |
| 2 | Treatment of the acting income and the two gifts | 1.5 |
| 3 | Total income of X, Mrs. X and A | 1 |
| Total | 5 |
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