Benefit of Minor PAN Card, Procedure to Apply & Income Tax

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Most of the Indians are under the impression that a PAN Card can only be allotted once a person turns 18 years of age. However, this is a myth as Minors can also apply for PAN Card and the Income Tax department also allots PAN Card to Minors without any hassles.

There are certain benefits of applying for PAN Card for Minors and before sharing the procedure for applying for Minor PAN Card, lets first discuss the benefits of having a PAN Card for Minors.

Benefits of applying for Minor PAN Card

PAN Card is mandatorily required in case you intent to make them a nominee on your investments like property, stocks and any other financial product. So in case you intent to make your minor child, a nominee for your investments, you would be required to furnish the PAN Card of the Minor Child.

Moreover, in case you intent to make any investment in the name of your minor child, in that case as well the PAN Card is required. The PAN Card of both the Minor as well as the Parent/Guardian would be required.

Therefore in case you intent to make investments in the name of your minor child or you intent to make him a nominee for your investments, it is mandatory for the minor to have a PAN Card.

minor-pan-card

Tax on Income of the Minor

The Govt is of the view that a minor child cannot earn any income on his own and in case there is any income that is arising in the name of the minor, it is not the minor child’s income but the income of the parents which is being received in the name of the child.

Therefore, any income received in the name of the minor child is clubbed in the income tax return with the income of the parent who has higher income. After clubbing of income of the minor child with the parent having higher income, tax would be levied as per the Income Tax Slab Rates.

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However, in case the marriage of the parents does not subsist, the income of the parent should be clubbed in the hands of the parent who maintained the minor child in the financial year.

Once the income of the child is included in the total income of either parent, any such income arising in the succeeding year shall not be included in the total income of the other parent, unless the income tax officer is satisfied after giving that parent an opportunity of being heard, that it is necessary to do so.

Certain Incomes Taxable only in the hands of the minor child

Although the general rule is that the income of the minor child should be clubbed with the income of the parent having higher total income, the following incomes shall not be clubbed and shall be taxable in the hands of the minor itself:-

  1. Any Income of the minor child suffering from any disability of the nature specified in Section 80U like physical disability, totally blinded etc.
  2. Such Income which accrues or arises to the minor child on account of any manual work done by him.
  3. Such income which accrues or arises to the minor child on account of any activity involving application of his skills, talent or specialised knowledge and experience.

If any of the above incomes is arising to the minor child, such income won’t be clubbed with the income of the parent and would be taxable in the hands of the minor child itself.

Other Relevant Points regarding Clubbing of Minor Child’s Income

  1. Child in relation to an individual includes a step child and an adopted child of that Individual.
  2. If both the parents of the minor child are not alive then the income of minor child cannot be clubbed and the guardian of the minor child shall file the income tax return on behalf of the minor.  Such income shall not be added in the income of the guardian, if the guardian is not a minor.
  3. In case the minor child attains majority during the financial year, then the income till the date he remained minor in the financial year shall be clubbed in the hands of the parent.

Procedure for applying for PAN Card of Minor

The procedure for applying for the PAN Card for Minors is fairly simple. The parents of the minor would be required to submit an application in Form 49A. This form can be submitted online as well as offline.

The fee to be submitted for applying for PAN Card is Rs. 105 (Rs. 93 + Service Tax @ 12.36%). This fee can be paid through Cheque/ Demand Draft/ Credit Card/ Debit Card/Netbanking. The cheque/Demand Draft should be drawn in favour of “NSDL-PAN” payable at Mumbai and the acknowledgement number should be mentioned on the back of the Cheque/Demand Draft.

Documents for Proof of Identity, Proof of Address and Proof of Date of Birth are required to be submitted while making the application. The Birth Certificate of the minor would be a valid proof for the Date of Birth.

In case of minors, the proof of identity and proof of address of either parent would be required to be submitted. The application should also be signed by the parent whose documents have been submitted. The signature of the parent would be printed on the PAN Card.

2 photographs of the minor child would also be required. However, the photo of the minor won’t appear on the PAN Card as there are several physical changes which develop in a minor over the course of time. In the space for photograph in the PAN Card, the word “Minor” would be stated. However, that does not mean that the photo is not to be submitted to the Income Tax Deptt at the time of making the application.

On attaining the majority, the applicant can file for correction in data of PAN Card and can furnish his photos and update his signature with the income tax authorities and the Minor PAN Card would be updated with his photograph and signature.

A Personal Finance enthusiast, Karan is the founder of charteredclub.com and loves to discuss about Money related matters.