Wants to close huf

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 February 2013 Dear Expert,

I am filing HUF IT returns from many years .
now i want to close my HUF.

There is investments in Shares, Mutual funds and all around 15-20 lacs.

What is the procedure to close down HUF.??

Pls reply ASAP

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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01 February 2013 Complete Partition- is the only practical way to close your HUF. After partition you have to file the final return.
.

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2013 Thank u sir for your reply,

In This case, There are three daughters, Karta and his wife.

HUF (Karta) can transfer entire wealth via Gift to his individual A/c. is it possible?

His daughters are not claiming anything, karta can do whatever he wants ,there is no objection from anyone.

90% of HUF investments are in MF, shares, FD.

Pls reply

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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03 August 2025 Hey! Here’s a detailed answer on **closing an HUF** and your specific query about transferring wealth via gift:

---

### 1. How to **close an HUF**?

* The only practical way to close an HUF is through a **complete partition**.
* Partition means dividing all HUF assets among coparceners (members) as per their share.
* After partition, the HUF ceases to exist for income tax purposes.
* You must file the **final income tax return** of the HUF for the year of partition.

---

### 2. Partition in your case (3 daughters + Karta + wife)

* The **coparceners** in the HUF are the karta, his sons, and daughters (daughters also have equal coparcenary rights now).
* Even if daughters are not claiming anything, legally they have rights to the HUF property.
* So, **all coparceners need to be accounted for** in the partition.

---

### 3. Can Karta transfer entire wealth by gift to his individual account?

* Technically, **gifting entire HUF wealth solely to Karta’s individual account is not legally valid** because the assets belong to the HUF collectively.
* The gift of HUF property can be made only to coparceners or other persons outside the family.
* If daughters waive their rights via a **family settlement deed** (registered), then Karta can receive more share, but such waiver needs to be legally documented.

---

### 4. Recommended procedure

* **Partition the HUF assets** between Karta and daughters, as per agreed shares.
* Transfer assets accordingly (shares, mutual funds, FDs).
* File final HUF ITR after partition.
* Karta and daughters can then hold the assets individually.
* If daughters do not want to claim their share, they can gift their share to Karta afterward (subject to gift tax provisions).

---

### Important points:

* Partition deed should be in writing and preferably registered.
* Partition triggers capital gains tax; calculate and pay accordingly.
* Seek professional legal and tax advice to structure partition smoothly.

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