Can Karta gift his Personal Individual Assets to his HUF?

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  1. Kandala Prasad

    Kandala Prasad New Member

    1. I have created an HUF with the gift money my wife got on our anniversary from her parents. However, i would like to know if i can put some of my personal earnings (I am a salaried person who regularly files the IT returns) into the HUF through bank transfers to increase the capital.

    2. Also i would like to know the capital so created is above the exemption level in one FY how is the appropriate tax paid (through advance tax method or is there any other method?).

    3. After i pay the tax in one FY, if there are further contributions in the next FY, then how is the tax levied (on the total amount of the capital or on the portion of the contributions in that FY only?)

    I have seen that some of the threads go unanswered, I will be grateful if my doubts can be answered.

    Thank You in advance.
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    The gifts received by the HUF from Family Members form the initial corpus of the HUF. As these gifts have been received from Family Members, they are exempted from the levy of income tax.

    Even in further years, if gifts are being received by HUF - it is exempted from the levy of income tax.

    Kindly refer this link which talks in detail about family members from whom gifts if received are exempted -
  3. gaurav_kumar

    gaurav_kumar Well-Known Member

    You would only be required to pay tax on the income earned by the HUF and not on the gifts received from specified family members.

    The Income of the HUF earned in a particular year would be taxed as per the income tax slab rates. The income tax slab rates of HUF are the same as the income tax slab rates for individuals.

    Tax once paid on a certain income is not required to be paid again and again. Tax on a specific income is only to be paid in the year in which it is earned.
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    Yes, you can gift your own personal earnings to the HUF to increase the capital of the HUF

    However, from the tax point of view - there will not be any benefit as provisions of Clubbing of Income under Section 64(2) will apply.

    This Section regarding Clubbing of Income comes into play when the taxpayer tries to divert his income to his family members to reduce his tax liability.

    And in the case mentioned by you above, provisions of clubbing of income will apply and the income arising in the hands of the HUF from your personal earnings gifted to the HUF - will be taxable in your hands and not in the hands of the HUF
  5. gaurav_kumar

    gaurav_kumar Well-Known Member

    Feel free to ask in case of any other queries.
  6. I have following question
    Say I have savings of Rs 1 crore and annual income of say Rs 10 lakhs plus Rs 8 lakhs interest = Rs 18 lakhs
    Say HUF income is Rs 0
    Say I transfer Rs 400,000 to HUF as gift.
    Then my taxable income decrease by (Rs 400,000 * 8/100) = Rs 32000 .
    And in HUF, I invest Rs 150,000 in tax savings FDs.
    Now gift of Rs 50000 isnt taxed
    And Rs 200,000 of gift income is below Rs 200,000 of tax limit
    So tax on HUF will be Rs 0
    So I save total tax of about Rs 32000 * 30% = Rs 10000
    So will I save tax? Ot will income of HUF be added to my income as per section-64
  7. Ams

    Ams New Member

    Gaurav Sir

    Please guide me to create capital in HUF 1. as my dad' retired & On retirements they received amount from their Govt. Office as Tax free Surplus Amount :

    Query1 : Can they gift directly to their daughter

    Query 2 : Can Dad' gifted amount introduce as Capital to HUF by that daughter who is Member in HUF

    Query 3 : Can Shares of Karta Can be gifted to HUF before selling that shares

    Query4 : Can HUF Members(daughter/wife) Or Karta Can give irrevocable Loan / Gift to HUF

    Query 5 : Can Karta Deposite Cash into HUF Bank A/c as Capital Infusion

    Query 6 :If FD' kept under HUF & received Interest on such FD then Interest Portion in whose name Taxable
  8. Girishkumar

    Girishkumar New Member

    Sir if capital asset transfered by individual member to huf, whether it will constitute transfer and chargeable to capital gain?
  9. MAP

    MAP Member

    with above question of Mr. kandala prasad answer remaines unanswered ! If a member of HUF gifts HUF with already taxpaid amount, then how will be clubbing of income for the purpose of incometax anfter gifting is done ? Will it be clubed next FY ?
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