coversion to HUF

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 a person is running a business in individually.

Now he wants to convert it into his HUF.

How can he do so.

U S Sharma

U S Sharma (Expert)
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02 July 2011 1st of all he has to get married, get a son, then apply for a HUF pan card,

business of individual can not be part of HUF, but HUF can get new business, which can takeover the business of individual.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 sir,

person is applied for PAN for his HUF.

What we have to takeover the business of individual to HUF.

6 month ago Individual has also taken a loan for business.

how we will convert loan from individual to HUF.

U S Sharma

U S Sharma (Expert)
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02 July 2011 he has to get new loan in name of HUF and repay the loan in individual name, as both are diff identity, bank will help in this matter.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 loan is in the name of proprietorship firm.

I think...
If we transfer whole firm from individual to HUF then Loan will also transferred to HUF. after that individual treat loan in te capacity of KARTA........ correct me, If I wrong.

assets will also transferred to HUF.

Please Reply

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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03 July 2011 You want to transfer the business of Individual to the HUF. Yes you can do so. Make an agreement with your HUF by way of declaration and transfer the same to the HUF. Submit a copy of this declaration to the Bank the Bank shall transfer the loan to HUF. The day on which the business is transferred the same shall be shown in the HUF but up to the date of transfer the income of the same has to be taxed in the hands of Individual.

Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2011 Thank you sir

I have one more query about clubbing of income.........

If I transfer my whole business including assets and loans to my HUF.

Whether income from that business will club in my individual income.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 July 2011 The taxable entity in that case will be the HUF and clubbing provisions will not be applicable.

What ever is your capital in the erstwhile firm, you may once withdraw it or either show as interest bearing unsecured loan to the firm.

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