Huf gift related queries (Income Tax)

This query is : Resolved

yashsr

( Author )
10 September 2012

Hello,

Yash gifts Rs.10 lac to 'Yash HUF' through payment by cheque. Now, Yash HUF makes a Fixed Deposit and earns Rs.1 lac in the year.

1) Will there be any tax on the gift from Yash to Yash HUF? If yes, who will pay the tax, Yash or Yash HUF?

2) Under whose income, Yash or Yash HUF, will the income of Rs.1 lac(interest on FD) will it be taxed? Will it be clubbed in Yash's income?

CA. Anuj Gupta

( Expert )
11 September 2012

1. yash,as income shall be clubbed with yash.

2. answered

Anuj

prakash kochar

( Expert )
12 September 2012

No Tax on gift by member to HUF, as per amendment gift is to relative.
Income from gifted amount will be clubbed with income of member donee Yesh.

yashsr

( Author )
12 September 2012

Hello Mr.Prakash,

1) Can you please refer the Section which says HUF is a relative? I've heard that HUF is not a relative since it is an artificial person.

2) Income from Fixed Deposit will be clubbed to the Karta from the HUF under which clubbing section in Income Tax Act?

Siddhartha Bhardwaj

( Expert )
13 September 2012

1. There is no tax on gift made by Yash to his HUF.
Further, Section 56(2)(vii) has been amended to provide that for an HUF relative means ite members. So the said gift is exempt in the hands of the HUF.

2. Section 64(2) provides that where the a member of the HUF transfers his asset to the HUF, income from such asset shall be clubbed in the hands of the karta.

prakash kochar

( Expert )
19 September 2012

Under amendment substituted sect. (e) to sect.56(2)(vii), w.e.f. 01-10-2009 (AY 2010-11)and onward), provides that "relative" shall also include any sum of money or property received by a HUF from its any member in addition to the person referred to in the Explanation to sect. 56(2)(vi).