The Weekly Obiter

TAX DEDUCTION AT SOURCE AND FILING OF INCOME TAX RETURN IN CASE BOTH THE PARENTS ARE DEAD OF MINOR: CBDT: MAY 29, 2017

June 27, 2017

The Central Board of Direct Taxes (CBDT) vide its Notification No. F.No.DGIT(S)/CPC(TDS)/NOTIFICATION/2017-18 dated 29.05.2017 has specified that in case of minors where both the parents have deceased, Tax Deduction at Source (TDS) on the interest income accrued to the minor is required to be deducted and reported against Permanent Account Number (PAN) of the minor child unless a declaration is filed under sub-rule(2) of Rule 37BA of the Income Tax. Rules, 1962 to that effect. It has been brought to the notice of CBDT that in cases of minors whose both the parents have deceased, TDS deductors / Banks are clubbing the interest income accrued to the minor in the hand of grandparents and issuing certificates to the grandparents, which is not in accordance with the law as the Income-tax Act envisages clubbing of minor's income with that of the parents only and not any other relative. Ideally in such type of situations, the income should be assessed in the hands of the minor and the income-tax returns be filed by the minor through his/her guardian. 

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