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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →If your minor child earns investment income through a demat account, it is generally included in a parent’s income under section 64(1A) of India’s Income-tax Act, 1961. The account being in the child’s name does not by itself decide who reports the income. For Assessment Year (AY) 2026–27, the parent reporting includable income uses Schedule SPI in ITR-2, subject to the parent’s eligibility for that return form and the rules for the relevant income type.
When is a minor child’s demat-account income clubbed with a parent’s?
Section 64(1A) generally requires income that arises or accrues to a minor child to be included in a parent’s total income. That can cover income associated with investments held through a demat account. The relevant question is the income and the statutory rules—not simply whose name appears on the account.
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There are two statutory exceptions: income the child earns through manual work or through an activity involving the child’s skill, talent, specialised knowledge or experience; and income of a minor child with a disability of the nature specified in section 80U. Assess the actual source of the income against the wording of the law; do not assume that all income connected to an account in the child’s name qualifies for an exception. Income-tax Act, 1961, section 64.
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Which parent reports the clubbed income?
If the parents’ marriage subsists, the minor’s income is included with the parent whose total income is greater, calculated before adding the income to be clubbed. If the marriage does not subsist, it is included with the parent who maintained the child during the previous year.
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Once a parent has included the child’s income, succeeding-year income generally continues to be included with that parent. A change can be made if the Assessing Officer, after giving an opportunity to be heard, determines that it is necessary. These attribution rules come from section 64(1A); keep the basis for selecting the reporting parent with the tax records. Income-tax Act, 1961, section 64.
How to classify the investment income
Do not treat all demat-account income as one category or apply one tax rate to it. Identify each item and report it under the applicable income head, using the rules relevant to that investment and transaction.
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| Income or transaction | What to establish before reporting |
|---|---|
| Dividends | Identify the dividend income and its applicable income head and treatment. |
| Interest | Identify the interest source and the applicable income head and treatment. |
| Sale of investments | Determine the applicable treatment for the particular asset and transaction, including relevant dates and holding-period facts. |
Use broker, depository, bank and fund statements, as applicable, to identify amounts and transaction details. The right computation depends on the asset and facts; no single rate applies to every holding or transaction. The AY 2026–27 ITR-2 guidance includes schedules for capital gains and income from other sources. Income Tax Department, ITR-2 schedules.
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How to report includable income in AY 2026–27 ITR-2
The Income Tax Department’s AY 2026–27 ITR-2 manual identifies Schedule SPI as the schedule for income of specified persons—such as a spouse or minor child—that is includable or required to be clubbed under section 64. The notified form asks for the person’s name, optional PAN or Aadhaar number, relationship, amount and income head. Report the amount in Schedule SPI and in the corresponding head-wise schedule as required by the form. ITR-2 online manual; Notified AY 2026–27 ITR-2 form.
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- Gather the records. Collect the relevant broker, depository, bank, fund and transaction statements and identify the income and transactions for the applicable tax year.
- Apply section 64(1A). Check whether the income is clubbed or falls within one of the statutory exceptions, then determine the parent to whom it is attributed.
- Choose the parent’s return form. Check eligibility using the parent’s full income profile and the current form rules; a child’s demat account alone does not decide the form.
- Complete Schedule SPI and the relevant income schedule. For AY 2026–27 ITR-2, enter the specified person’s details and the clubbed amount in Schedule SPI, then report it under the applicable head as directed by the form.
- Check the parent’s tax regime. Verify the current utility’s treatment of section 10(32) before claiming any exemption.
Is ITR-2 always the right form?
No. The correct return depends on the parent’s entire income and the AY’s eligibility rules—not just on the fact that a minor has investment income. The Income Tax Department describes ITR-2 as applying to individuals and HUFs with income other than income chargeable under “Profits and Gains of Business or Profession,” and lists capital gains among the covered income categories. Check the official eligibility rules for the parent’s full circumstances before filing. Income Tax Department, ITR-2 eligibility.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does the ₹1,500 section 10(32) exemption apply?
The Income Tax Department’s general clubbing guidance describes an exemption of ₹1,500 per minor child for income clubbed under section 64(1A). But that amount should not be treated as universally available for AY 2026–27: CBDT’s validation rules say that when the new tax regime is selected, exempt income under section 10(32) for a minor child should not be more than zero. Check the parent’s selected regime and the current AY return utility rather than automatically deducting ₹1,500. Income Tax Department, clubbing guidance; CBDT, AY 2026–27 ITR-2 validation rules.
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