Minor becomes a tax payer if her income arises from her skills

Depending on the income, the applicability of maintaining books of account, tax audits and service tax need to be examined separately


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My son (15) is a singer and performs at live shows where he gets paid. I want to know how his earnings will be taxed.

—Mohit Bhatnagar

As per section 64(1A) of the Income-tax Act, 1961, clubbing provisions (i.e., income of the minor is clubbed with the income of the parent) would be applicable if the minor (i.e., below the age of 18 years) earns an income.

But these clubbing provisions are not applicable if the income arises or accrues to the minor child on account of activity involving application of his skill.

Since your son earns income by performing at live shows, the income earned shall be taxable in his hands. He will be taxed as a separate taxpayer. The amount received by him for his performances would generally be taxable as income from business or profession. Depending on the income, the applicability of maintaining books of account, tax audits and service tax need to be examined separately.

If I resign from a company after total service of 6 years, kindly confirm if there would be any tax deducted at source (TDS) on withdrawal of my Provident Fund (PF)?

—Nikhil Sharma

The PF withdrawal triggers a tax liability if the same is withdrawn without rendering continuous services with the employer for a period of 5 years or more. But if the accumulated PF balance maintained with the old employer is transferred to the PF account of the current employer, then the period of previous employment is also included as part of continuous service.

As you have already completed more than 5 years of service with your employer, there will not be any tax implications on receipt of the accumulated PF amount in the year of receipt of the amount. Accordingly, there will be no TDS at the time of payment. But you will have to report the PF withdrawal amount in the personal income tax return (ITR) form, to comply with the reporting requirements. The PF withdrawal will be as per the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which requires you to have a non-employment period of 2 months after leaving your job.

I married in 2016. My wife and I received gifts in the form of cash from relatives and friends, which totalled around Rs.45,000. Do we have pay tax on it?

—Yash Mehta

Under section 56 of the Act, any sum of money, the aggregate value of which exceeds Rs.50,000 received by an individual during the financial year (FY) without or for inadequate consideration, is taxed under ‘income from other sources’ in the hands of the recipient. But any amount received from specified relatives, or that received on the occasion of marriage, is not taxable in the hands of the recipient.

As the aggregate value of cash received by both of you during

FY17 is on occasion of your marriage, there will not be any tax implication.

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