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News From Press Your child may have to pay tax on the prize money she won using her skills

Your child may have to pay tax on the prize money she won using her skills

Source: Mint Mar 21, 2017

My daughter won Rs4 lakh in a quiz contest. We will be using it to fund her coaching this year. How will this be taxed?

—Nandana Desai

Clubbing provision (i.e. taxation in hands of either parents) applies if minor child (i.e. below the age of 18 years) earns income [section 64(1A)]. However, the said clubbing provisions are not applicable if the income arises or accrues to the minor child on account of activity involving application of skill, talent or specialized knowledge and experience. In the present case, even if your daughter is minor, since she has won the quiz by applying her skill, talent or specialized knowledge; the income earned shall be taxable in her hands only.

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