urgent tax planning through HUF
This query is : Resolved
PULKIT BANSAL
(Querist)
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
CA Mohit Kumar
(Expert)
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
CA Mohit Kumar
(Expert)
30 May 2017
for tax planning purpose
Message likes :
1 times
PULKIT BANSAL
(Querist)
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
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
- ITC not to be taken in accounts & GSTR-3B
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
