HUF - PPF Rebate 80C through Gift

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This query is : Resolved

Mohit (Querist)

03 April 2021 Hi,

My personal 80C limit is completely exhausted through Insurance premiums, ELSS, and Child's education. I have recently created a HUF that does not have much capital. I am currently trying to create stream of capital in HUF.

I wanted to know if HUF can deposit money in my PPF account to get 1.5L rebate. Since HUF does not have any significant capital source right now , can I gift money to HUF (1.5L) as a Karta . Since PPF is EEE , there should be no tax liability on me through clubbing provision.

Is this process correct in the eyes of income tax or does it invite any legal issue ?

Regards,
Mohit

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)

03 April 2021 in view of definition of relative under section 56, for an HUF its members are its relatives. so from this point of view, an HUF can accept gifts of any amount from its members. So the amount of Rs. 1.5L you want to gift does not have tax implications in the hands of HUF u/s 56 since HUF can accept any amount as gift from its members. investment made by HUF in PPF account of its member will be exempt in the hands of HUF u/s 80C of the Act.

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