Tax on Gift by one HUF to another HUF

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  1. MAP

    MAP Member

    Yet it's confusing as if one of the member of HUF gives gift to HUF, than it's very easy to shift fund from one's personal account. Karta will give gift to spouse, will be tax free. Than spouse who is member of HUF will gift to HUF ! ( Talking about more than Rs.50,000/-)
  2. ZED

    ZED Well-Known Member

    Such cases tantamounts to indirect transfer. The income generated by the gift will be taxable.

    The income generated by HUFs own income will not be clubbed for eg HUFs business income invested in shares to earn dividend or interest income from debentures of FD.

    But if member gave money to HUF, then no doubt gift will remain to be exempt but the income by utilizing the money of gift will be clubbed in the hands of the relative of HUF who gave the gift.

    Formation of HUF does not serves any purpose at all if there is no ancestral property or if HUF is not carrying the business.

    The family business, that is where most of the members of the family together used to carry out the business in the name of family, is true business of HUF.
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