Skip to content

CA Final · Direct Tax Laws & International Taxation · Income of Other Persons included in Assessee's Total Income

Mr. Bhatia has a total income of ₹12,00,000 and his wife has a total income of ₹8,00,000, both before considering their minor daughter's income. The minor daughter earned ₹2,00,000 from stage performances using her own singing skill, and ₹60,000 as interest on fixed deposits made out of gifts from her grandparents. Ignoring any statutory exemption available for a minor child's clubbed income, what amount of the daughter's income is included in the total income of Mr. Bhatia?

₹60,000 is included in Mr. Bhatia's income. A minor child's income is clubbed with the parent having the greater total income, which is Mr. Bhatia. However, income earned by the child through her own skill or talent, here the ₹2,00,000 from performances, is not clubbed.

  1. A₹2,60,000
  2. B₹60,000Correct
  3. CNil, as the wife's income is lower and the daughter's income is therefore clubbed with her
  4. D₹2,00,000

Explanation

A minor child's income is clubbed with the parent whose total income is greater, which here is Mr. Bhatia at ₹12,00,000. Income earned by the minor through her own skill, talent or specialised knowledge is excluded from clubbing and is taxed in her own hands. Only the ₹60,000 interest on investments is clubbed. The option of ₹2,60,000 wrongly includes skill income, and the option of nil wrongly picks the lower-income parent.

Did you get it right without looking?

One question tells you little. A timed set on Income of Other Persons included in Assessee's Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Income of Other Persons included in Assessee's Total IncomeFree diagnostic mock

More Income of Other Persons included in Assessee's Total Income questions