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Huf tax related questions

Raghav (Manager) (26 Points)

01 June 2017

I have the following question regarding taxation for a HUF account

1. Can I transfer other incomes into the HUF account ? for example , incomes sources like rental income, interest earned on my FD

2. Am I allowed to make FD's and earn interest on HUF account ?

3. If answer to 2 is YES, will the income earned on HUF FD's have the same tax slabs when it comes to taxation?

4. What are the valid reasons by which the karta can withdraw amount from a HUF account ?

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 01 June 2017

1. Can I transfer other incomes into the HUF account ? for example , incomes sources like rental income, interest earned on my FD

Ans: NO (taxation aspect)

2. Am I allowed to make FD's and earn interest on HUF account ?

Ans.: YES, with HUF own capital.

3. If answer to 2 is YES, will the income earned on HUF FD's have the same tax slabs when it comes to taxation?

Ans: YES

4. What are the valid reasons by which the karta can withdraw amount from a HUF account ?

Ans.: For the welfare/benefit of the family/member, including KARTA.

Raghav (Manager) (26 Points)
Replied 01 June 2017

Sir,

Thank you for the answers, To clarify further, Is it possible for a member of the HUF to transfer post tax paid FD interest to the HUF account ?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 02 June 2017

HUF can accept any gift (why only FD interest) of any amount from its members, without any tax liability on either of them.

Raghav (Manager) (26 Points)
Replied 02 June 2017

Sir, Thanks for your reply, Can I transfer my tax paid (TDS deducted salary) to the HUF account ? Is it allowed ?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 02 June 2017

You can, but clubbing provision shall apply.

Read: "

As per section 64(2), when an individual, being a member of HUF, transfers his property to the HUF otherwise than for adequate consideration or converts his property into the property belonging to the HUF (it is done by impressing such property with the character of joint family property or throwing such property into the common stock of the family), then clubbing provisions will apply as follows:

Before partition of the HUF, entire income from such property will be clubbed with the income of transferor.

After partition of the HUF, such property is distributed amongst the members of the family. In such a case income derived from such property by the spouse of the transferor will be clubbed with the income of the individual and will be charged to tax in his hands."

Also refer: https://incometaxmanagement.com/Pages/HUF/19-Clubbing_Provisions_In_Case_Of_Gifts_Received_By_HUF.H T M L