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Can an huf recieve/give gift? (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
14 April 2012

Can an HUF give/receive gift to/from :-
1. members of HUF?
2. persons other than members of HUF?
What will be the Tax implications?
Please give a detailed reply on it.


CA PARAS BAFNA

( Expert )
14 April 2012

In Finance Bill 2012, a retrospective amendment w.e.f 1.10.2009 is going to be taking place by substituting a new clause ii) for Explanation (e) to Section 56(2)(vii) -
In the case of an HUF Relative menas ANY MEMEBER OF THAT HUF.
.
There is no Restriction for HUF in receiving the gifts. But gifts received above Rs 50000/- from persons other than relatives is treated as taxable under the head Income from Other Sources.
.
Gifts received from members of HUF are not taxable and can be accepted by the HUF.
However, Section 64(2) will play its own role. In such cases, income derived by the HUF from the amount received from members as a gift, is liable to be clubbed in the respective member's hand.
.


Vivek Mehta (CA, DISA,CS, MBA)

( Expert )
15 April 2012

Bafana ji have said right...


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
16 April 2012

In addition to Mr. Bafna kindly consider this also
Receipt of gift by HUF excluded from tax u/s section 56(2)(vii)
Any sum or property received by an individual or HUF without consideration/inadequate consideration shall not be taxable, as stipulated in the budget proposed.
The earlier intention of the provision was that any gift received by HUF from its members, if exceeded a stipulated benchmark of Rs 50000, would go on to be taxed under the head “Income from other sources” .However, in case of individuals, receipt from relatives were excluded from the purview of this section and was to be treated as non-taxable .The definition of relative (being on exemption list) will henceforth constitute members of HUFs also, and therefore form a barrier to invoke Sec 56(2)(vii).


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