Key Points
When parents are married, it is the responsibility of the highest earning parent to pay income tax on gains or returns received on investments made in the name of the minor..
Read here to know which parent has to pay income tax on behalf of minor after the divorce.Getty.
Usually when the parents are married, any income on investments and capital gains arising on sale of investments made by the parents in their minor child's name shall be included in the gross total income of the higher-earning parent," says Dr Suresh Surana, Founder, RSM India, a tax and business consulting group...
Tax experts say that the responsibility of paying income tax on behalf of the minor child cannot be split between the divorced parents..
"The provisions of the Income-tax act do not provide for such exclusion to allow parents to excuse themselves from paying taxes on their minor child's income solely because he or she bore the maintenance expenses of the child before the divorce..
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Income tax implications of investing in shares, mutual funds, bank FDs in child's name
03, Nov, 23Investments in the name of minor childrens for future expenses like college education, marriage, others can be done in many instruments including shares, mutual funds, bank fixed deposit (FD), post office schemes among others. Further if the income of a child is clubbed with the parent then a tax exemption is also given.