urgent tax planning through HUF
This query is : Resolved
30 May 2017
can a doctor form a HUF and receive some portion of his professional income in HUF as a measure of Tax planning
please provide the solution along with case law or section of IT Act
30 May 2017
no , HUF can not earn professional income. This is your individual income. You have to take other income like rent, interest, dividend etc....
Message likes :
1 times
30 May 2017
for tax planning purpose
Message likes :
1 times
30 May 2017
thanx for the reply sir ,it would be very helpful if you give the case law related to it
02 August 2025
Sure! Here's a detailed explanation:
**Can a Doctor form an HUF and receive professional income in HUF for tax planning?**
* **Short Answer:**
No, a professional (like a doctor) **cannot divert his personal professional income to an HUF**. The professional income is considered the individual’s income and cannot be split or assigned to the HUF for tax benefit.
* **Why?**
Professional income arises from personal skills and expertise, which cannot be transferred to another entity (including HUF) unless the entity itself is practicing. HUF is a separate taxable entity but cannot practice profession on behalf of its member.
* **Relevant Sections & Case Laws:**
1. **Section 2(31) of the Income Tax Act** defines HUF as a separate entity for income tax.
2. **Section 2(36)**: ‘Profits and gains of business or profession’ means profits from carrying on business or profession by the assessee himself.
3. **CIT v. Seth Hiralal Damodar Lal (1965) 56 ITR 473 (SC):** The Supreme Court held that professional income arises from personal skill and cannot be attributed to HUF.
4. **CIT v. K.K. Verma (1981) 129 ITR 181 (SC):** It was held that income from profession is personal income and cannot be split with family or HUF.
* **What income can HUF receive for tax planning?**
HUF can receive income from:
* Rental income from property owned by HUF
* Interest, dividends, capital gains on investments made in the name of HUF
* Business income where HUF itself is engaged as a separate business entity (not profession)
---
**Summary:**
The doctor’s **professional income is taxable in his hands only**. However, he can undertake investments or own assets in the name of HUF and receive income therefrom to save tax legitimately.
If you want, I can share sample planning ideas for utilizing HUF income sources for tax benefits. Would you like that?
**Can a Doctor form an HUF and receive professional income in HUF for tax planning?**
* **Short Answer:**
No, a professional (like a doctor) **cannot divert his personal professional income to an HUF**. The professional income is considered the individual’s income and cannot be split or assigned to the HUF for tax benefit.
* **Why?**
Professional income arises from personal skills and expertise, which cannot be transferred to another entity (including HUF) unless the entity itself is practicing. HUF is a separate taxable entity but cannot practice profession on behalf of its member.
* **Relevant Sections & Case Laws:**
1. **Section 2(31) of the Income Tax Act** defines HUF as a separate entity for income tax.
2. **Section 2(36)**: ‘Profits and gains of business or profession’ means profits from carrying on business or profession by the assessee himself.
3. **CIT v. Seth Hiralal Damodar Lal (1965) 56 ITR 473 (SC):** The Supreme Court held that professional income arises from personal skill and cannot be attributed to HUF.
4. **CIT v. K.K. Verma (1981) 129 ITR 181 (SC):** It was held that income from profession is personal income and cannot be split with family or HUF.
* **What income can HUF receive for tax planning?**
HUF can receive income from:
* Rental income from property owned by HUF
* Interest, dividends, capital gains on investments made in the name of HUF
* Business income where HUF itself is engaged as a separate business entity (not profession)
---
**Summary:**
The doctor’s **professional income is taxable in his hands only**. However, he can undertake investments or own assets in the name of HUF and receive income therefrom to save tax legitimately.
If you want, I can share sample planning ideas for utilizing HUF income sources for tax benefits. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Regarding Appointment of auditor in case of casual vacancy
- RCM on GTA Services
- Conversion of Proprietorship Firm to Partnership Firm
- Validity of form 15 G and 15 H on Interest on fixed deposit
- GST 9- Table 8
- REVENUE RECOGNITION AS PER IND AS 115
- How to update Transaction data in broker samco account holding after transfer shares KARVY
- For sale of shares of a private limited company, what is process cost and time for demat of shares
- TDS AFTER SUBMISSION OF 15 G OR H
- Mismatch of Sales Invoice in GSTR-1
- TDS- defaults - old period ie. F.Y. 2012-2013 etc, etc
- Supply to unit situated in SEZ
- GST- DRC 03 RCM Liability
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
Trending Online Classes
CAclubindia
