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Gift to huf of son

Naveen Kumar Jain (Chartered Accountant) (640 Points)

02 September 2014

A makes a gift of money, by bank transfer,to HUF of his son and daughter -in law, where son is Karta. A is not a member of this HUF. Will income from investment of the gifted money/ property be clubbed with A's income or not? or it will be taxed in hands of HUF? Is the gift made to HUF of son be regarded as gift to relative and exempt from tax? Or HUF will be required to pay tax on it?

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CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13531 Points)
Replied 02 September 2014

As per section 56, any sum of money received without consideration exceeding Rs. 50,000/- by an HUF will be taxable in the hands of HUF if it is received from non relatives. You are a non relative since relative covers only a member of HUF. As such if money transferred to HUF is more than Rs. 50,000/- than whole of such sum shall be deemed to be the income of the HUF. However no clubbing provisions will be applicable therefore if such money is invested by HUF and income is earned on it the same will be income of HUF only.