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Gift to huf (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
07 April 2012

there is some change in recent budget 2012 about gift to huf please clarify


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

( Expert )
08 April 2012

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).
The amendment will be effective retrospectively from 1st October, 2009.


CA. Nitin Agrawal

( Expert )
08 April 2012

very well explained by Mr. S.S Agrawal


prakash kochar

( Expert )
09 April 2012

Under the existing provisions of clause (vii) of sub-section (2) of section 56 any sum or property received by an individual or HUF for inadequate consideration or without consideration is deemed as income and is taxed under the head “Income from other sources”. However, in the case of an individual,receipts from relatives are excluded from the purview of this section and are therefore treated as not taxable. The definition of relative as given in this sub-clause is only in relation to an individual and not in relation to a HUF. In some of the cases HUF was treated as relative and gifts exceeding Rs. 50000/- were excluded from tax.
It is proposed to amend the provisions of section 56 so as to provide that any sum or property received without consideration or inadequate consideration by an HUF from its members would also be excluded from taxation. This amendment will take effect retrospectively from the 1st day of October, 2009.


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