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Huf query

vipul (ca ipcc) (76 Points)

17 December 2014

1. Can I gift / loan Rs. 20 Lakhs to my father HUF without attracting the provisions of Section 64(2) which will be invested further and income will be generated.

2. He got HUF pan card a while ago and not used it . Is HUF valid without corpus fund and ancestral property i.e HUF has no capital nothing. Is it valid

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2 Replies

Sumeet Lunkar (CA) (48 Points)
Replied 17 December 2014

One should also keep in mind the provisions concerning section 64 of the Income-tax Act, 1961. As per this section if the member of the Hindu Undivided Family were to make a gift to the HUF, in that situation the income arising to the HUF will be clubbed to the income of the person making gift to your own HUF.

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13531 Points)
Replied 19 December 2014

1. In case you are a member of your father's HUF and make a gift of 20 lakhs then income generated will be clubbed in your hands. But if you make a loan then no clubbing provisions will be applicable since you will be getting repayment and interest. If you are not a member of your father's HUF then though no clubbing provisions will be applicable but since you will not be a relative of HUF and any gift of more than Rs. 50000/- will be taxable in the hands of HUF since HUF cannot receive more than 50000/- as gift from non relative. therefore in both situations it is better to make a loan rather than to gift money.

2. Although HUF without capital is like a baloon without air but legally it can survive and from point of view of income tax also as long as PAN is existent. But you may now infuse capital into it by making a loan and your father or other family members may also infuse some capital. Any business may also be started in the name of HUF.