Hello !! I want to contribute 20 to 25 lakhs to my son for Purchase of FLAT at Pune ... Till the time he finalize his flat , i wish that my son will create HUF and I will contribute to HUF and He will take deposit in name of HUF . So interest earned will be taxable as HUF and not of individual .. Whether it is advisable , or it will heat any provision of clubbing of income .. Please advise .. Also my son himself can contribute to HUF and take deposit of 20 lakhs ?
PLEASE GUIDE !!!
Will the contribution be gift or loan?
Will the flat be for self use or to be given on rent?
Dear Sir,
Thanx for reply..
Sir , I wish to give GIFT to HUF created by my SON and his wife ( 2 Members.). My son will buy a flat , by his own contribution plus contribution done by me in HUF... He wants to buy flat for his own self use, till he is in PUNE...
Can he also contribute same amount of Rs. 20 Lakhs , in HUF and can take deposit of Rs. 40 Lakh ( 20 from Gift by his parents, and 20 his self contribution. ). He will buy flat his own name, to avail TAX benefit....Total esitmaited cost of flat is 80 Lakh.
1. Your gift to your son will be tax-exempt, but taxable if gifted to his HUF, if above 50,000. Secondly, in this scenario of purchasing flat in the name of HUF, I don't see any tax saving.
2. You can give loan to his HUF or give gift/loan to your son, without any tax liability.
3. If your son gifts any amount to his HUF, it will be tax-exempt but any income arised(rent or capital gain) from the flat purchased out of it will be taxable in his hand. (clubbing provision).
4. Better thing would be purchase flat in his own name, out of his own contribution plus your loan/gift, and/or home loan (to get interest deduction from his salary income)
Dear Sir,
Thanx for immediate and very good reply... Only for one thing , more clarification required.
FIRST CASE
SUPPOSE
1) I will give LOAN to HUF of my son , say 20 LAKHS just in SEPT, 2016.
2) HUF WILL DEPOSIT IN BANK , AND EARN INTEREST FOR ONE YEAR .
3) WHTHER IT IS HUF INCOME, OR IT WILL BE CLUBBED IN MY INCOME.
SECOND CASE
SUPPOSE
1) MY SON CONTRIBUTE RS. 20 LAKHS TO HIS HUF .
2) HUF DEPOSIT AMOUNT IN THE BANK FOR ONE YEAR
3) INTEREST EARNED WILL BE HUF INCOME OR WILL CLUBBED IN MY SON INCOME......
1. It will be HUF's income, but firstly HUF will have to pay tax on your gift; because its taxable.
2. It will be clubbed to your son's income.
Its not legal way. Assessing Officer has right to assess the interest income in your hand. It seems someone has advised to save tax by creating HUF, but half-way. You cannot save tax just by creating HUF. The tax planning should be proper. There are some specific modes to create corpus of any HUF.
At present answer to your query is, if HUF invests into any scheme/s whereby taxfree income or dividend is generated, your plan can be successful.
Thanx very much ! Reply is useful . My tax consultant had given me some misleading information , i was doubtful so i had thought to take second opinion !!!!! Once again thanx
Most Welcome
CAclubindia
