Child labor is a crime in the country, but now children have found such means of earning which do not come under the category of crime. Nowadays children are earning big money through Instagram, YouTube and talent shows. Now the question arises that who has to pay tax on children’s earnings? To the child or his parents.
Here we have brought the answer to this question of yours, in which we will tell you how much income tax exemption is given to children and how income tax is imposed on their earnings. After which you will easily calculate the tax on your child’s earnings.
Children’s income falls into two categories
Minor children have two types of income, first is earned and second is unearned income. In this, earned income includes self-earned money like earning from social media, competitions or reality shows. Whereas unearned income includes things like property, land and property. At the same time, the interest on the investment made in the name of the child is also considered as unearned income.
What is the law for children?
According to Section 64(1A) of Income Tax, the annual income of Rs 1500 of minor children does not come under the ambit of tax. If the child earns more than this, then income tax is calculated by adding his income to the income of the parents.
If both the parents of a minor child earn, then income tax is calculated by adding the income of the minor child to the income of the one who has higher income.
What will happen in case of divorce?
If the parents of a minor child get divorced, then in such a situation his income will be added to the income of the parent who has the custody of the child. If the child is an orphan then he has to file his ITR himself.
