Wants to close huf
Querist : Anonymous
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
.
Querist : Anonymous
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
---
### 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.
---
Click here to login now
Similar Resolved Queries
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
- NRI ITR2 account in 2025-26.
- Query regarding reporting of exempt foreign remuneration in ITR (AY 2026-27)
- FEMA/RBI treatment — Amazon.ca arbitrage (US buy, Canada sell, goods never enter India)
- Goods return by customer
- INWARD REMITTANCE FOREIGN
- CPC and SAC
- Account freezed for Ineligible ITC Scrutiny for GST Annual Return
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
