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Clarification regarding huf income

somayajulua@yahoo.com (somayajulua@yahoo.com) (24 Points)

19 July 2014

Dear Sir,

I am salaried employee. My Gross annual emoluments are 14 lacs per annum.Even after availing all the Tax exemptions applicable u/s 80 for Individual I am paying Tax of Rs 1.0 Lacs approximately.

My nett taxable income after all exemptions under section 80 was Rs 820770 with Tax liability of Rs 96979 for the last F.Y.

Apart from salaried income I have income source as my son sends me amount from abroad out of his savings after Tax deduction as per U S Law.

Can I save tax by filing returns under HUF apart from Individual income.

I studied about HUF in the articles. I propose to start HUF account & obtain HUF Pan Card .Can I show part of salaried income or Foreign remittance in the HUF income & reduce my TAX burden which is at higher Tax slab by filing two Tax returns.

somayajulua @ yahoo.com

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3 Replies

CHIRAG DEEPAK GANATRA (CA FINAL) (1054 Points)
Replied 19 July 2014

YOU CAN NOT TRANSFER OR PASSED ON YOUR INCOME IN THE HANDS OF HUF...

AS YOU HAVE HIGHER INCOME IT IS ADVISABLE TO GO FOR HOUSING LOAN WHICH WILL SAVE TAX

YOU ALSO CAN AVAIL DEDUCTION IN SECTION 80C, 80D, 80G ETC

1 Like

Studentsca (CA Practice ) (3577 Points)
Replied 19 July 2014

Your Salary Income cannot be transferred to HUF, but you foregin remittance can be transfered to HUFas your Son can give Gift to his father's HUF or to Father as Gift from Relative is exempt under Income Tax.

Any sum received by an individual is not taxable in his hands if it is received from a relative as defined under the Income-tax Act. A relative includes a son. So, the amount received by a father from his NRI son is not taxable in India in the hands of the father.

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Studentsca (CA Practice ) (3577 Points)
Replied 19 July 2014

Any inward remittance received by Parents cannot be treated as "Income" as per the definition. This can at best be treated as "Gift". However in India there is No Gift tax for certain relations and there is no ceiling on the amount. In your case gifting of money by son to father or viceversa is allowed without any limits and tax implication. However if father were to invest this money in his name and make gains, the gains would be taxable.

However if the Money is being transfered with specific purpose such as to buy a property, etc make sure you have the Bank give Parents an certificate of Inward remittance. This is also advisable even otherwise, the Inwared Remittance certificate from Bank certifies that the credit entry in the account is because or funds comming into India and if the tax authorities were to question the large amount of credits, it would be proof that it is due to Inward remittance and not due to say a sale of property.