Huf gift to it's members

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Gifts from a Hindu Undivided Family (HUF) to its members are generally not considered taxable income. While there's a threshold of Rs. 50,000 for tax exemption on gifts, higher authorities and tribunals have often ruled that gifts from an HUF to its members are exempt, as members have a pre-existing right to family property. This means such receipts are not treated as income without consideration, and even if challenged, exemptions under Section 10(2) of the Income-tax Act may apply.

ARUN GUPTA

ARUN GUPTA (Querist)
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29 October 2021 Can huf gift to it's members? What will be the tax liability and impact will be whom?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 October 2021 Well upto Rs. 50K PA is exempt.
More than that is liable for tax in the hands of member; but it is accepted to be exempt by higher authorities in many cases.

ARUN GUPTA

ARUN GUPTA (Querist)
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29 October 2021 In what cases gift by huf to its members is accepted as exempted?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 October 2021 For other than marriage occasion, some courts or tribunal have treated it as exempt..
read:
1. https://www.dnaindia.com/personal-finance/column-gift-received-from-huf-is-not-taxable-2790276

2. Veenitkumar Raghavjibhai Bhalodia Vs. I.T.O.5(4) Rajkot ITA No 583 and 601/Rjt/2008 Asst.Yr. 2005-06 Ahd. Tribunal. Dated 17/05/2011

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 October 2021 Yes, no tax liability on any body.

ARUN GUPTA

ARUN GUPTA (Querist)
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29 October 2021 Can we gift any amount from huf to it's members?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 October 2021 Yes, no limit, cash gift limited less than 2 lacs.

Chandigarh bench of the Income-tax Appellate Tribunal (Tribunal) held that the
provision of section 56 (2)(vii) of the Income-tax Act, 1961 (the Act) does not apply to a gift given by a Hindu Undivided Family (HUF) to its members, on the premise that a member has pre-existing right
in the family properties. Thus, when a member receives any sum from the HUF, during the subsistence of the HUF or on its partition, it cannot be treated as receipt without consideration. The Tribunal also held that even otherwise, the taxpayer was entitled to exemption under section 10(2) of the Act.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 October 2021 As such the the amendment in sec. 56(2) of act is pending from long time. That is the reason assessee has to fill the heat of assessing officer most of the times, and take the shelter of appeals.

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