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Can huf do gift to its family members .?

Pawan (CA) (26 Points)

24 July 2014

Can HUF Do gift to its family members..? In Act Clear Say that an indvidual can give gift to HUF as amended in 2009 but in reverse situation is ACT Silient. Example I want to give Insurance Premium above 50000/- From MY HUF File to One of Family Member & Debited to my capital Ac (i.e. Gift ).. Can i Do or i have to face litigation. ?

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2 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 23 February 2015

hello,

If member received a gift from its huf, then it will be taxable in member’s hand as income from other source.

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 24 February 2015

Coming to your question, H.U.F is allowed to Gift to Members of H.U.F in certain cases(i.e with in reasonable limits,on the occassion of Marriage of Daughter and even long after the marriage as long as it is not conflicted by Assessing officer and proven to Fraud) as per HIndu Law. But to claim expenses in H.U.F Profit and Loss account and to claim tax benifit in the form of expense, it should be H.U.F's business expense. In the given case if H.U.F paid premium for LIC policy, taken on members of H.U.F, then it will be allowed u/s.80C. So you need not to treat it as Gift whether it is above Rs.50,000 or not. Coming to gift, GIft is an Appropriation of Income for any assessee and not allowed to claim as expense for Income tax purpose and it is taxable in the hands of receipient of Gift. But if gift is received from relative then it is not at all taxable whehter it exceeds Rs.50,000 or not. So in your case whenever gift is received by member from H.U.F it is not at all taxable in the hands of receipient too. But when ever such gift is transferred by such member then cost of acquisition should be taken as "ZERO"