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CMA Intermediate · Direct and Indirect Taxation · Clubbing of Income

Vikram has two minor children and files jointly with no other clubbing. His total income exceeds his wife's. Child A has a specified disability and earned ₹50,000 interest. Child B earned ₹20,000 interest and ₹60,000 by performing in a music show using her own talent. Ignoring any exemption for minor child income, what amount is clubbed in Vikram's total income because of the children?

₹20,000 is clubbed. A disabled minor's income and a minor's income earned through personal skill or talent are not clubbed with the parent, so only the other child's ₹20,000 interest income is added to the higher-income parent's total income.

  1. A₹1,30,000
  2. B₹70,000
  3. C₹20,000Correct
  4. D₹80,000

Explanation

A minor's income from manual work or from activity involving the child's own skill, talent or specialised knowledge is not clubbed. The income of a minor child with a specified disability is also not clubbed. So Child A's ₹50,000 and Child B's ₹60,000 are left out, and only Child B's ₹20,000 interest is clubbed. Adding all three gives the wrong ₹1,30,000.

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