Query on HUF

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2010 What is the simplest way of creating and increasing capital for an individual HUF account in myself and my wife's name, so that I can divide my tax liability 3-ways and get benefit of Rs. 160,000/- in each? I'm married with 1 child. Can I transfer funds as gift from my personal a/c to both HUF and wife?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 November 2010 Dear Anonyji,
HUF is not required to be created by law. It comes into an existence once a male marries with a female. From the first received Gift by the newly wedded couple, the nucleus of HUF Property comes in to an existence. (Preferably this gift should be shown from father or eldest family member.)
For increasing capital of HUF gifts may be accepted by the HUF but Section 56(2)(vii)
(from 1.10.2009) must be taken care of where gifts received from non-relatives exceeding 50000/ attracts tax liablity.
Relatives defined in Section 56 seems to be in relation to an Individual only. Who are relatives of an HUF ? this question is
left, perhaps, open by the act (as well as by me also). However, our experts will help us in this matter.

But, members are of course relatives of an HUF. HUF can receive gifts from its members without attracting Section 56 but the income arising from the Property or money transferred is liable to be
clubbed in the hands of the member transferring such asstes in the common stock of the family .

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