Huf

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2016 Respected Sir's
My father and myself have a joint FD with my father as first holder.(individual) and myself as second joint holder ( individual)
We also opened an HUF in FY 2015-2016 with my father as karta and myself as member.
Can we show the interest earned from the above FD in FY 2015-2016 in HUF return or in my fathers individual return ?
Can my father transfer money from his regular saving account to the HUF account without any gift tax implications ?
Please kindly advise.

Thanks and Regards
Son

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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11 July 2016 HUF must receive ancestral property through a will. If any member transfers his/her property to the HUF then the income will be clubbed in the hands of the transferor.

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2016 Dear Sir
Thank you for your kind response.
But sorry I am confused. My query is not related to inherited property...

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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12 July 2016 Interest income will be of your father alone as the investment was made from his personal wealth.

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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12 July 2016 What I meant earlier is that only income from property held in HUF name (which must be inherited) is to be shown in the return of the HUF. Income of any member of HUF cannot be shown in HUF return.

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2016 Dear Sir
Thank you very much. So my father will show this interest income in his individual IT return.
Can you please also advise on the below questions :
1) Can HUF receive monetary gift from his own karta or coparcener ? Does HUF have to pay gift tax for receiving this money ?
2) Can karta or coparcener receive monetary gift from its own HUF ? Does the karta or coparcener have to pay gift tax for receiving this money ?

Thanks for your advice.

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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12 July 2016 Transferring asset (including money) to HUF is of no use because income earned from such asset by the HUF will be taxable in the hands of the member who transferred the money due to clubbing provisions. If karta transfers money to HUF which is kept in FD then income will be taxable in the hands of the karta.
Karta can receive salary from the HUF.
Please note that the HUF that has been created must receive property from your grandparents. The will should clearly mention that the property is passed on to your father's HUF on not to your father. Creating an HUF after ancestral property is received is of no use in tax planning.

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2016 Dear Sir
Thank you very much.
So can my father transfer back the money from HUF to his own saving account now without any gift tax implication for him or HUF ?

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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12 July 2016 Sure, no problem. One should always confirm tax implications before doing any transactions. Believe me, clearing up the mess afterwards is a big headache.

S S Dahale

S S Dahale (Expert)
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16 July 2016 From Income tax regulations, it is very much clear that HUF is considered as different ENTITY , like a individual, No one can show income earned as INTEREST on FD held by HUF as that of an INDIVIDUAL or vice versa , Hence Do not ATTEMPT. to transfer those entries here and there , it will be TOTALLY WRONG to Do so....