Law panel explores income tax relief to single mothers

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NEW DELHI: The Law Commission is examining whether single mothers can be relieved of the income tax accruing on maintenance payment for a minor in a divorce settlement.

Under I-T rules, interest on money deposited as maintenance payment for a minor is clubbed with the income of the guardian. The commission, headed by Justice (retd) B S Chauhan, is expected to submit a report in this regard soon, a person aware of the matter told .

A reference on the subject was received by the commission recently from the Punjab and Haryana HC. According to the person cited earlier, the court said an exception against clubbing of income from maintenance money is a “desirable thing” in case of minor children residing with a single parent. “Circumstances of the minor having received maintenance money are different from say a minor in whose name some business has been started by either of the parent or who has been advanced some gift during the subsistence of marriage of parents,” the court said.

The court has drafted two questions for the commission: “Whether interest earned by a minor from maintenance placed in a fixed deposit by the minor’s father should be treated as income of the minor, and if answer to this question is in the affirmative, whether interest income accruing to the minor should be clubbed with the income of the parent who maintains the child.”