PAN Card and Income of Minor in India

Did you know there is no age limit for applying for PAN Card In India?

As per section 160 r/w section 139A of the Income Tax Act’ 1961, even a minor can apply for PAN card in India through a representative assessee.

Why does a minor need a PAN Card?

Ans: A minor may need a PAN Card in the following situations:

• When parents want to make an investment in the child’s name.
• When parents intend to make their minor child a nominee of their investments in MF, Shares etc.
• When a bank account for the child needs to be opened in the name of the minor.
• A PAN Card can also be used as an identity proof of the minor.
• When a minor has an income on his own and it is not to be clubbed with the income of the parent/guardian. In this case, they will be required to file an ITR and will need a PAN Card.
• If the minor child is suffering from any disability of any nature specified under Section 80U of the Income Tax Act and earns any income.

When is the income of the minor taxable in the hands of the minor and he/she needs to apply for PAN and file ITR?

Ans: As per section 64(1A) of the income Tax Act’1961, the income of the Minor shall not be clubbed/included in the income of his/her parent or guardian if such income has been earned by the minor as a result of:

A) Any manual work done by the minor himself or herself.

B) Any activity which involves application of skill or talent or special knowledge and experience of the minor themself.

Eg: the minor may earn income by acting in a series or play etc. him or herself, such income is based on his/her own talent and will not be clubbed with income of the parents/guardian.

In such a case a minor will be required to file their ITR and may need a PAN for doing so.

Any other income (except the income as mentioned above) of the minor earned from any investment they hold in their name is to be clubbed in the income of the parent/guardian of the minor.

Also, any income earned as a result of investment made out of funds/income earned by the minor on his own through manual work, skill, talent etc. is also to be included/clubbed in the income of his/her guardian or parent.

What happens if the minor child is suffering from any disability of the nature specified under Section 80U of the Income Tax Act?

Ans: The clubbing of income provisions do not apply in case of income earned by a minor child who is suffering from any disability as specified section 80U, any income earned by such minor suffering from disability as specified in section 80U will be taxed in the hands of the minor and he/she will have to file an ITR and take a PAN in his/her name.

Is there any exemption for the parent/ guardian in case income is to be clubbed in the income of the parent/ guardian?

Ans: Where the income of the minor is to be clubbed in the income of an individual. Such individual shall be entitled to an exemption of Rs. 1500 in respect of income of such minor child.

In case the income of the minor child is less than Rs. 1500, the exemption will be limited to the amount of such income of the minor.

How to apply for PAN of a minor

PAN of the minor can be applied through his/her guardian/parent as a representative assessee either offline or online.

Documents Required to Apply for PAN of the Minor are as follows:

• Date of Birth Proof of the minor to be enclosed with the application like birth certificate, mark sheet of a recognized board
• Address Proof of Representative Assessee must be enclosed.
• Identity Proof of Representative Assessee should be enclosed.
• Minor should not Sign or Affix thumb impression in the application form
• The PAN application must be signed by the Representative Assessee in the application form on behalf of the minor.
• Colour Photographs of the minor should be Affixed in the Application Form with across sign of the representative assessee on one of the photos.

Do not forget to fill the Representative Assessee (RA) column in the PAN application form with the information about the RA of the minor.

Updation of PAN of the minor

In the event of a minor turning into a major, the existing PAN card in his/her name needs to be modified to reflect the new changes.

ITR of the Minor

It is also the responsibility of the guardian to file an ITR on behalf of the minor as a representative assessee.

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(The author is a Chartered Accountant and can be contacted at info@youronlinefilings.in or capratikanand@gmail.com or Mobile: +91-9953199493)