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TDS deductors and banks must deduct and report tax deducted at source on interest income of a minor child against the permanent account number of the minor when both parents of the minor are dead. The income must not be clubbed with the income of grandparents or other relatives. Alternatively, a person can file a declaration under sub-rule (2) of Rule 37BA of the Income-tax Rules, 1962.
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F.No. DGll(S)/CPC(TDS)/NOlIFICAlION/2017-18 Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income-tax(Systems) New Delhi.
New Delhi, 29 May, 2017
Subject: - TDS and filing of ITR in case both the parents are dead of minor - reg.-
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 TDS 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.
Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.
In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby specifies that in case of minors where both the parents have deceased, TDS on the interest income accrued to the minor is required to be deducted and reported against PAN of the minor child unless a declaration is filed under sub-rule(2) of Rule 37BA of the I.T. Rules, 1962 to that effect.
(P.ahu'ga eng [unclear in source]) Dy. Commissioner of Income-tax (CPC-TDS), O/o the Pr. Director General of Income-tax (Systems), New Delhi
Copy for kind information to:-
Dy. Commissioner [unclear in source] O/o the Pr. Director General of Income-tax (Systems), New Delhi
