Meaning

Exemption under section 10(32) of the Income Tax Act comes into play only when the income of a minor child is clubbed (i.e., added) into the income of his parent in terms of section 64(1A).

Provisions of section 10(32) of the Income Tax Act, 1961

As per section 64(1A), the income earned by the minor is required to be clubbed in the total income of the parent whose income is higher. However, income earned by the minor on account of any manual work carried out by him or income earned by carrying on the activity which involves the application of skill or talent of the minor is not included/ clubbed. Thus, in case the income of minor is clubbed in the total income of the parent as per section 64(1A), then the parent with whom the income is clubbed would be eligible to claim exemption available under section 10(32).

Amount of Exemption Available

The following amount is available as an exemption under section 10(32)–

i) Rs. 1500 per minor child , or
ii) The amount of income clubbed in the income of the parent.

whichever is lower.