Fund raising for HUF What makes it Legal or Illegal while avoiding Clubbing

I have created my HUF with my wife and son with no consideration or ancestral property, I am the karta of HUF

Currently I have Bonds, SGB's, Stocks and MF's and some cash, I do not have ancestral property to attach to huf currently

I want to raise funds in HUF and want to avoid clubbing provisions, also want to explore ways to legally better plan the tax and eventually start family business

I have few queries regarding below solutions and want to know if it is legal to implement it , if not what are the alternative means to achieve the same

1] Give as interest free or interest at RBI Bank Rate (2.5%) for X number of years loan to my HUF and use the money to buy bonds, Stocks or any other asset from Me, My relative or open market , Can I have a digital documentation of such loan agreement instead of stamp paper

2] Can I purchase SGB's in secondary market which are about to mature and gift to my HUF, as SGB do not have capital gains tax and once the amount is matured I can use the fund to purchase other assets.

3] Can I offer my stocks or bonds as loan and expect bank interest rate from HUF for value on execution day.

4] may be 20 years down the line I will inherit ancestral property, what are the tax and cost implications to get the property under HUF

5] Is it possible to dissolve the current HUF and then recreate new HUF

Are there any other ways I can raise funds for HUF

What makes fund raising legal and illegal when trying to avoid clubbing

For your 3rd points onwards answers follows: In India, HUFs can borrow from members, including those who are part of the HUF. If you lend stocks or bonds to the HUF, the HUF can pay interest to you. However, the interest rate should be at a market rate or as per the Income Tax Act norms to avoid any tax implications. The interest income will be taxable in your hands.

When you inherit ancestral property, it's considered your share in the HUF property if it's part of the HUF assets.

Tax implications: There's no tax on inheritance of ancestral property in HUF.

Cost Implications: You might need to pay stamp duty and registration fees if the property is transferred to the HUF or if there's a partition deed involved.

For 5th answer, Yes, an HUF can be dissolved (partitiioned) and then members can forma new HUF with new assets.

Partition: Needs to be done via a deed or through a court if contested.

New HUF formation: After partition, members can create a new HUF with their shares.

HUFs can raise funds through: Interest-free loans from members

Income from HUF assets (like rent, dividends).

Selling HUF assets.

LegaL: Raising funds through legitimate HUF income, loans from members at market interest rates (if interest is involved), or gifts from members within tax-free limits.

Illegal: Raising funds through undisclosed income or using HUF for personal expenses to avoid tax clubbing under income tax laws.