Money transfered by a member to huf: section 64(2)

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MPSINGH JOLLY (Querist)
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14 August 2013 Respected Experts,
I have a query regarding HUF,
I have gifted money to my HUF as Karta by Account Payee two Cheques Rs.50000/- & Rs.190000/- Total Rs.2,40,000/- during F.Y.2013-14.
Is this Rs.240000/-exempt from I.Tax in the hand of my HUF & under which section ?.
Is Clubbing of Income u/s 64(2) required for Interest Income Rs.21088/- of my HUF from the above mentioned gifted amount Rs.241000/- during F.Y.2013-14.{In this site there is reply on July-2012 that Clubbing u/s 64(2) is not required for Money Transfer, It is applicable on Property Transfer.}
What is the amount of Income from Other Sources for my HUF for F.Y.2013-14
Please clarify,
Much Obliged
M.P.Singh Jolly

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 August 2013 1. The sum received by the HUF is exempt u/s 56(2)(vii).

2. Income received on such sum shall be taxable in YOUR hands u/s 64(2).

MPSINGH JOLLY

MPSINGH JOLLY (Querist)
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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2024 ### Gift to HUF and Tax Implications

#### 1. **Exemption of Gifted Amount**

In the context of gifts to a Hindu Undivided Family (HUF), the following points are relevant:

- **Gifts to HUF:** Gifts made to an HUF by a member (Karta) are generally considered valid under Indian tax laws. As per the Income Tax Act, gifts made to an HUF are not considered as taxable income in the hands of the HUF, provided they are received from a relative or from the Karta himself.

- **Relevant Section:** Under **Section 56(2)(x)** of the Income Tax Act, 1961, any sum of money received by an HUF from a non-relative (in this case, it’s from the Karta, who is a relative) is not taxable. Since you, as a Karta, are part of the HUF, gifts to the HUF by you are not considered taxable.

- **Documentation and Compliance:** Ensure that proper documentation is maintained to show that the money gifted to the HUF is from valid sources and is not in violation of any gift tax provisions.

#### 2. **Clubbing of Income**

- **Section 64(2):** This section deals with the clubbing of income and specifically applies when income arises from assets transferred to a spouse or minor child. In the case of HUF, since the money is gifted and not property, **Section 64(2)** does not apply. The income from the gifted amount, such as interest, is not clubbed with the income of the individual who gifted the money. The clubbing provisions apply to property transfers rather than money transfers.

#### 3. **Interest Income**

- **Interest Income Taxation:** The interest income of ₹21,088 earned by the HUF from the gifted amount is to be treated as income from other sources for the HUF. This interest income will be included in the total income of the HUF for the Financial Year (FY) 2013-14.

#### 4. **Income from Other Sources Calculation**

- **Income from Other Sources:** For FY 2013-14, the income from other sources for the HUF will include the interest earned on the gifted amount. The amount of ₹21,088 is the interest income and should be declared under "Income from Other Sources" in the HUF's tax return.

### **Summary**

1. **Gift of ₹2,40,000** to the HUF is **exempt** from tax under Section 56(2)(x) as it was gifted by the Karta himself.
2. **Clubbing of income** under Section 64(2) is **not applicable** as it pertains to the transfer of property, not money.
3. **Interest income of ₹21,088** earned on the gifted amount is taxable and should be reported as "Income from Other Sources" in the HUF's tax return for FY 2013-14.

If there are further complexities or additional concerns, consulting a tax professional would be advisable to ensure compliance and accurate tax reporting.

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