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....
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30 May 2017
for tax planning purpose
Message likes :
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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?
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