Celebrate Freedom with 20% OFF on CAclubindia Pro Subscription. Use Code: FREEDOM20

Query in respect of huf - tax saving

Tax planning 394 views 1 replies

CA Prateek Garg

Consultant

149 Points Joined June 2012

Hello Frnds,

Please solve the case mentioned below :-

Mr. A [Karta of HUF]

Mr. B [ Member of HUF]

"B" invest Rs. 10 lacs into HUF in the year 2012-13. HUF creats FD for the same amount for 1 year and got interest income of Rs. 1 lacs. Now Rs. 1 lacs will be clubbed in the income of Mr. B and tax on interest will be paid by Mr. B.

Now Total Rs 11lacs again invested in FD by HUF in the year 2013-14. Now suppose interest income is Rs. 110000/-.

Now my question is interest income of Rs. 110000/- is income of HUF and tax on this full interest income will be paid by HUF or it is partly HUF (up to Rs. 10000) and the rest interest income will be the income of Mr. B ( Rs. 100000) in the year 2013-14.

Kindly suggest asap.

Replies (1)

CS Advocate Abhishek Goyal

M Com FCS LLB M-AIMA

14032 Points Joined June 2009

Clubbing provisions will apply only on interest earned in the first instance on money transferred to HUF. In 13-14 no clubbing provisions will apply since the entire amount including interest earned in the first instance was invested in FD again.