Impact of taxation?

I am Karta of Naval Rungta HuF in which my wife and 2 married daughters are coparceners.

I have permitted my daughter to trade in for shares (as her husband is working with a corporate and she is not permitted to trade in her own account) in the huf and she has been doing so since last few years and taking care of annual returns etc.

She is holding shares in her own name with a depository and needs to sale part of it for undertaking the renovation work of the apartment jointly bought with husband.

Husband has fully financed the purchase of the apartment with own funds and loan from a bank.

Therefore for renovation work she will transfer the shares from her account to the Huf account and sell the shares which are her long term holdings.

Please help and guide me about the taxation issues and ways to minimise it.

TIA

Since the shares are held by the daughter in her individual name, the cleanest route is that she should sell the shares from her own demat/trading account and offer the capital gains, if any, in her own ITR.

Transferring the shares to the HUF merely for sale may not help in tax minimisation. If the shares are transferred without adequate consideration, the transfer may not trigger capital gains at the gift stage, but clubbing provisions can be examined and the income/gain may still be attributable to the transferor/member.

Further, using HUF funds for renovation of a property jointly owned by daughter and her husband may create avoidable questions, because the property does not appear to belong to the HUF.

Therefore, avoid routing through the HUF only for tax planning. Let the daughter sell the shares in her own name, compute LTCG under Section 112A, use available exemption, grandfathering benefit, loss set-off and, if possible, spread the sale across financial years. Proper demat records, contract notes, bank trail and renovation bills should be maintained.