Huf queries



Hi. 
 
I have an annual income more 10 lacs from salary and till date savings of Rs. 25 lacs which earns an interest of 1.5 lacs annually through fixed deposits. However because the tax slab applicable for me is 30%, I end up paying tax of 45 thousand every year on my income from FD. We are a Hindu family and eligible to open an HUF account. I also understand that if I open an HUF account and show the FD income in that account my tax liability will reduce. 
 
However I have the following queries: 
 
1. Do I need to transfer the saving of 25 lacs in the HUF account (created on the new HUF PAN card) ? Or can i only take the interest income is HUF bank account without moving my savings to HUF account? 
You may choose not to answer this one as I can find it out from the bank. But if you have any idea please share your thoughts.
 
2. In case If I transfer my savings to HUF account as gift, can I take it back from HUF account to my personal savings account (may be to buy a property or such a big expense) without paying any tax? Or will it be considered as income in my personal bank account and I will be liable to pay tax for such a transfer from huf to personal account?
 
Any help on this is appreciated. Thank you in advance.
 
Reply   
 
KVO Merau Kutchh

1. Because of  clubbing provision, interest income  will be taxable in your hands, so no tax benefit..........

2. HUF can accept gift from its member/s but cannot give back except in case of marriage or family walfare occassion........ So be careful in planning.......


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Reply   
 

Thank you for the response. I have one more query. If I am the Karta of the HUF account, Can I buy a property on my name (or my spouse's name) from the HUF account utilizing the money from HUF account? I understand that I can do daily utility expenses from that account. However, if the amount is too big and If some day I have to pay taxes on it when I take it back then its of no use. Because I have already paid taxes on the amount that I will be transferring to HUF account now. If I have to again pay taxes someday in future then it does not really help. Please let me know
 
Reply   
 
KVO Merau Kutchh

1. You can buy/register property in HUF name........ you being Karta of HUF as signing authority........

2. No need to pay any tax while transferring money to HUF........


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Reply   
 

Ok. So you mean I can buy a property by paying from the HUF account? What If in future I wish to sell or transfer this property. Will I again have to take the property amount in HUF account in case I sell it? Or Can I take the amount in my personal account as well? Can I transfer such a property to my Son? Or Can I make him the sole nominee of such a property?

 

I understand that while transferring the money from personal to HUF account I do not have to pay any tax. But while transferring back I need to pay the tax. right?

 
Reply   
 
KVO Merau Kutchh

1. When you sell, the purchaser will issue cheque/DD in favour of your HUF only.

2. You can take back your loan amount, if the amount was not gifted.....

3. Your Son, being member of your HUF can retain it in the same name/brand without any trouble, ( and after you, your eldest son can be karta of the HUF)

 
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i have my dads huf account, i want to close it, can the whole amount be transfered to my name,where my mom and sister ready to accept and make Noc for that to transfer whole amount to my account,, as we want to close the HUF account of my dads name,.

 
Reply   
 
KVO Merau Kutchh

Make Dissolution Deed, and share the assets/ bank balance of HUF between all the members with mutual consent.

If other members allow, you may get total amount, but get it registered.

After dissolution of HUF, inform jurisdictional ITO about the same.

 
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i made deed and all consent,when should i give to ITO, or wait for their letter, or my CA shall submit

will i have to pay taxon that part of amount i.e 1lakh i took from HUP will i be taxed on that amount

last question ,,

 
Reply   
 
KVO Merau Kutchh

No tax liability over members when the HUF is dissolved.

Your CA should file last ITR as upto the date of dissolution. The copy of dissolution deed with a copy of acknowledgement of the ITR should be submitted to Jurisdictional ITO.

 
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