How much money can a child make and still be claimed as a dependent?

Last Updated at: March 11, 2020
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income tax - How much money can a child make and still be claimed as dependent_ (1)

This post is written by Sanjay Muthukumar

 

Introduction:

There is no prescribed monetary value that has been set for the dependency of the child in India.

Chapter VI A of the Income-tax act, 1961, defines the word “dependent” and prescribed a set of standards be met in order to claim as a dependent. An income tax assessee can attain a tax benefit by incurring any expenditure in the name of the dependent. Similarly, there are a lot of provisions that have been mentioned in the income tax act, 1961, pertaining to the tax savings or deduction schemes of the assessee, who spends on the dependents.

Who can be claimed as a dependent:

The term “dependent” refers to the person, who an individual, financially depends upon the tax assessee for their survival. The dependent should be relative to the assessee ex: spouse, children, brother, etc.  i.e no third part can be claimed as a dependent. The word “relative” was broadly discussed in the income tax act, 1961, which states that the relative is an individual, who can be husband, wife, sister, brother, and any lineal ascendant or lineal descendants.

Here the parents, spouse, children, brothers, and sisters must be an individual and they should be wholly or mainly dependent on the assessee for their maintenance and living. Similarly, a member of the Hindu Undivided Family (HUF) can be claimed as a dependent. 

The assessee can avail a lot of tax-benefits by spending on these dependent. The expenditure made on these dependents can be claimed under section 80C, 80D, and 80DD of the income tax act, 1961.  

File income tax returns now

Child dependency provisions:

Basically, in India, the child (son) can be claimed as a dependent until he starts his own earning. In case, if the child is daughter, then the claim of a dependent will be till her earning or getting married, whichever is earlier, irrespective of the age factor. Similarly, if the child is differently-abled or suffering from permanent disability of both physically and mentally, then they can be claimed as a dependent irrespective of the age limit. Here the word “child” includes both the step-child and adopted child.

By referring to the Central Government Health Scheme (CGHS), which elucidated the criteria for dependency, when the government employee was deceased, it says that the son is eligible for dependency until he attains the age of 25 years or till he starts earning or gets married whichever applies earlier. And if the son is suffering from any permanent disability then he can be considered as a dependent even above the age of 25 years. Here the disability means blindness, low vision, mental retardation, hearing impairment, etc. similarly, the daughter is eligible until her earning or marriage. In 2014, the government amended the rules regarding the divorced daughter of the deceased. Now the family pension will be granted to the divorced daughter but the divorce proceedings should be conducted during the lifetime of the employee and the divorce should take place after their death.    

Tax benefit for an assessee:

The section 80D provides a health benefit of deduction of up to 25,000 for the dependent children. Similarly, if the children are differently-abled or wholly dependent, then the expenditure made on them can be claimed under section 80DD of the income tax act. The tax benefit under section 80DD differs upon the rate of disability of the depending person. If the disability of the dependent person is between 40% to 80%, then the tax benefit will be up to Rs 75,000 for the tax assessee. In case, if the disability rate is above 80%, then the tax deduction of Rs 1,25,000 can be availed.

 

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How much money can a child make and still be claimed as a dependent?

283

This post is written by Sanjay Muthukumar

 

Introduction:

There is no prescribed monetary value that has been set for the dependency of the child in India.

Chapter VI A of the Income-tax act, 1961, defines the word “dependent” and prescribed a set of standards be met in order to claim as a dependent. An income tax assessee can attain a tax benefit by incurring any expenditure in the name of the dependent. Similarly, there are a lot of provisions that have been mentioned in the income tax act, 1961, pertaining to the tax savings or deduction schemes of the assessee, who spends on the dependents.

Who can be claimed as a dependent:

The term “dependent” refers to the person, who an individual, financially depends upon the tax assessee for their survival. The dependent should be relative to the assessee ex: spouse, children, brother, etc.  i.e no third part can be claimed as a dependent. The word “relative” was broadly discussed in the income tax act, 1961, which states that the relative is an individual, who can be husband, wife, sister, brother, and any lineal ascendant or lineal descendants.

Here the parents, spouse, children, brothers, and sisters must be an individual and they should be wholly or mainly dependent on the assessee for their maintenance and living. Similarly, a member of the Hindu Undivided Family (HUF) can be claimed as a dependent. 

The assessee can avail a lot of tax-benefits by spending on these dependent. The expenditure made on these dependents can be claimed under section 80C, 80D, and 80DD of the income tax act, 1961.  

File income tax returns now

Child dependency provisions:

Basically, in India, the child (son) can be claimed as a dependent until he starts his own earning. In case, if the child is daughter, then the claim of a dependent will be till her earning or getting married, whichever is earlier, irrespective of the age factor. Similarly, if the child is differently-abled or suffering from permanent disability of both physically and mentally, then they can be claimed as a dependent irrespective of the age limit. Here the word “child” includes both the step-child and adopted child.

By referring to the Central Government Health Scheme (CGHS), which elucidated the criteria for dependency, when the government employee was deceased, it says that the son is eligible for dependency until he attains the age of 25 years or till he starts earning or gets married whichever applies earlier. And if the son is suffering from any permanent disability then he can be considered as a dependent even above the age of 25 years. Here the disability means blindness, low vision, mental retardation, hearing impairment, etc. similarly, the daughter is eligible until her earning or marriage. In 2014, the government amended the rules regarding the divorced daughter of the deceased. Now the family pension will be granted to the divorced daughter but the divorce proceedings should be conducted during the lifetime of the employee and the divorce should take place after their death.    

Tax benefit for an assessee:

The section 80D provides a health benefit of deduction of up to 25,000 for the dependent children. Similarly, if the children are differently-abled or wholly dependent, then the expenditure made on them can be claimed under section 80DD of the income tax act. The tax benefit under section 80DD differs upon the rate of disability of the depending person. If the disability of the dependent person is between 40% to 80%, then the tax benefit will be up to Rs 75,000 for the tax assessee. In case, if the disability rate is above 80%, then the tax deduction of Rs 1,25,000 can be availed.

 

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