HUF consulatation

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This discussion explores the tax treatment of substantial donations made to a Hindu Undivided Family (HUF). It clarifies that while a HUF may need to pay tax on the donation received, the income subsequently earned from that investment is generally taxable to the HUF itself, not clubbed with the individual donor. Gifts from members to a HUF are typically exempt, but specific sections like 64(2) of the IT Act may apply if individual property is transferred for inadequate consideration, leading to income clubbing.

Satish Mehra

Satish Mehra (Querist)

16 June 2023 If an assessee donates 1.2cr to HUF, and HUF invests that money. Will the income so earned by that investment will be taxable to HUF or will be clubbed with the donor. Section 10(2)

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 June 2023 If any assessee donate 1.20 Crs to HUF, firstly, HUF will pay tax over the donation received.
After the payment of tax over the amount, there will not be any tax liability over donor for the income earned by HUF.

Satish Mehra

Satish Mehra (Querist)

16 June 2023 As far as I know Karta can donate any amount to HUF, without any tax implications.

Satish Mehra

Satish Mehra (Querist)

16 June 2023 In case of HUF, gift received from any of the members of the HUF is exempt from Income. And this is Explained in definition of relatives exempte from gift threshold of 50,000.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 June 2023 Here gift given is more than Rs. 50,000/-
Any way the interest income will get clubbed in the individual income of KARTA.

Satish Mehra

Satish Mehra (Querist)

16 June 2023 HUF is specified relative and hence gift above 50,000 ar not taxable if given by any of the member or karta. And also the income earned is taxed to HUF itself. Sir, if you have any section or case law supporting your claim please share.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 June 2023 Sec 64(2) IT act... In case, a member of HUF transfers his individual property to HUF for inadequate consideration or converts such property into HUF property .... Income from such converted property shall be clubbed in the hands of individual.

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