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
- Accounting treatment of AMC alongwith the purchase of Laptop
- Condonation Request sec 119(2) b -Enhancement Limit of Leave Exemption prior to AY 2023
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Transfer of Physical Stock Between Two Proprietorship Concerns
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- Taxation of crypto futures in India Fy 2026- 2027
- Issuing of delivery challan by seller of goods
- EPF ECR NEW RULES Sep 17th 2026
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
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
