Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Consultancy services by huf's karta

Anuj M (Director) (55 Points)

26 October 2014

Hi All,

Can a Karta of a HUF provide consulting services or do freelancing jobs for some other company/firm ? If yes, can the professional fee be accepted in the HUF's saving account and will be it be considered as HUF's income ?

Regards,

Anshul

Reply
Follow
Share

4 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 27 October 2014

I think providing those consultancy services is not a business of H.U.F and if karth provide consultancy services on his own, it is immaterial whether amount is credited to Kartha personal account or H.U.F'S account. It is just matter of Journal entry. If you want to tax such Income under H.U.F Status then show it as H.U.F's income or pass journal entry of Bank account Dr To Kartha account.

Anuj M (Director) (55 Points)
Replied 27 October 2014

Thanks for your view point Nuli. But it will make a lot of difference if credited to my account and if credited to HUF's account as I am in 30% tax bracket whereas HUF is in 10% tax bracket.

How does taxman will see this transaction ?

Ajay (CA Job) (512 Points)
Replied 27 October 2014

Dear Anuj

Any income received by a karta in his individual capacity will be taxable in the hands of the karta as a seperate individual and not in the hands of the HUF. It will be taxable in the hnads of the HUF only if the income is a form of return on investemnt made by the HUF from their joint property. In your case, you provided the professional services in your individial capacity, so just because the income got credited to the account of HUF doesn't make it the income of the HUF.

Regards

Ajay