There are many rules regarding income tax. But do you know if the child started to earn, then who will pay tax? then today’s article is for you. Child labor has been considered illegal in our country, but in today’s time, there are many such means available, through which children also earn a lot of money. From all the talent shows on TV to platforms like YouTube and Instagram, children are earning a lot of money. But if there is any tax liability on the income of these children according to the income tax slab, will the child have to compensate or his parents? Here’s what the Income Tax Department’s rules say about this.
Difference between earned and unearned income
A minor can have two types of income. The first is the income that he has earned himself, and the second is the income that he has not earned, but the ownership of which is of the child. If the child earns through a competition or reality show, through social media, or in any other way, then it is considered his earned income.
But if the child gets any property, land, property, etc. as a gift from someone, then it is considered his unearned income. If parents make an investment in the name of the child and the interest they get on it, it is also considered the child’s unearned income.
What the law says
Section 64(1A) of the Income Tax Act lays down rules relating to the income of minors. According to the rule, if a minor earns, he does not have to pay tax. His income is added to his parents’ income. Then the parents have to pay income tax according to the prescribed tax slab on the total income.
Income up to Rs 1500 tax-free
Under Section 10(32), a child’s annual income up to Rs 1500 has been exempted from the purview of tax. The income above this is added to the income of his parents under Section 64(1A).
If both parents earn
If both the mother and father earn, then the tax is calculated by adding the child’s income to the income of the two. If a minor wins the money in the lottery, then 30 percent TDS will be deducted directly from it. Then a surcharge of 10 percent will be levied on this TDS, and a 4 percent cess will also have to be paid.
