Huf - transfer of property by karta
This query is : Resolved
22 September 2012
I have recently formed a HUF which constitutes of my wife and 2 children. I have a commercial office (no loan property) which generates a steady monthly income for me. This income gets added to my income and gets taxed in the highest tax bracket. Besides that, I also face challenge of creating any other source of funds from my HUF beyond the limit of Rs 50,000 per annum. I am reaching out to you to find the procedure of transferring this property of mine, as a Karta to my HUF so that the corresponding income could also form a part of HUF income which could be used for further investments for HUF. Thank You
Pankaj Gupta
(Expert)
22 September 2012
Firstly please tell me that how you formed the huf by making your wife as a part of it? Wife is not a part of huf. She is the member of huf of her father.
Pankaj Gupta
(Expert)
06 October 2012
If an individual transfer his property without adequote consideration to the common stock of huf then such property as well as income from such property shall be clubbed in the hands of such individual u/s 64(2).
So there is no benefit in transferring your assets to the huf.
So there is no benefit in transferring your assets to the huf.
Pankaj Gupta
(Expert)
06 October 2012
But one thing can be done. If you intends to invest your money anywhere, then dont do it yourself. Rather issue an interest free loan to your huf and let it invest the money at the same place. The income thus generated will be taxable in the hands of huf and not in your hands. Because giving loan is not a transfer of property and hence not covered by sec 64(2).
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