Tax on FD interest in HUF account for amount received from personal account

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Ashu (Querist)
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31 March 2023 I am a salaried individual and planning to create a HUF.
1. Will that be fine to transfer my post tax savings from salary to HUF bank account and create FD's there?
2. Will there be Income clubbing applicable for me on FD interest from HUF account? The FD would be created using the amount received from my salary account.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 March 2023 1. Not preferable, create separate capital by gifts from relatives.
2. Yes, when any gift received from member/s of HUF itself.

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Ashu

Ashu (Querist)
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31 March 2023 Thank You Sir.
Need one clarification reg. monetary gift received by HUF as per above case. Referring to this point:
"Money received by a HUF from its members."
mentioned in
"Are there any cases in which sum of money received without consideration, i.e., monetary gift received by an individual or HUF is not charged to tax?"
section of
https://www.caclubindia.com/articles/faqs-on-gifts-received-by-an-individual-or-huf-31669.asp

which says the gift amount will not be charged to tax.

Similar info can be seen here too on page-2 https://incometaxindia.gov.in/Tutorials/18.%20Tax%20treatment%20of%20gifts.pdf

1. Does it mean we can gift the amount to HUF through some special process as a member also but can't do direct transfer(like online NEFT etc).
2. Since the gift amount amount is not getting taxed, the FD interest earned on that amount should be taxable to HUF and not to member?

Kindly guide.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 March 2023 The reference provided above is only w.r.t. gift received by individual/HUF.
In short, RELATIVES OF HUF: In case of HUF, members are its relative. So as per provisions of Section 56(2)(X) of Income Tax Act,1961, gifts received from members shall be exempt in hands of HUF.
Now refer: Section 64(2) of IT act:: In case, a member of HUF transfers his individual property to HUF for inadequate consideration or converts such property into HUF property, then the income of taxpayer shall include the income from such property.
OR If you are a member of a HUF and you transfer your property to the common pool of such HUF for inadequate consideration, then your total income shall include the income from such property. You shall be liable to pay tax on the total income as per the provisions of clubbing of income.

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