Rent income in the name of parents

Being My parents are senior citizen I calculated 480000 but what about HUF 160000 is the tax free braket or How you arrive at Rs 640000 or what if karta is 1) senior citizen & 2) below Age 60,  in case of HUF what will be tax free income initially 

Mr. Suhas, The basic exemption limit doesn't depends upon the Age of Karta. Hence, you can avail benefit of Rs.1,60,000/- only either Karta of HUF is Senior Citizen or not.

Dear friends is there any applicability under the head income from other sources if we transfer any immovable property as gift and the stamp duty of such property exceeds by Rs.50000/- .If we transfer only income with out transferring the asset then clubbing provisions apply.But we transfer the asset as a gift i think the same is taxable under the head income from other sources.is my contention is correct.Please advice me.

thank u vineet sir... it is clear now

Dear srinu

If gift is from family members, no tax on that income, But if it is from any other than family, the only income upto 50,000 is tax free. for family it cover all acending and decending members Like father, mother sister brother in law Brother & sister etc for clear definitionof family member please read about gift tax,

Thank you Mr.Suhas.

Dear Friend

If I create HUF of My parents only, Karta is Dad & member is Mom,(only 2 persons ) & transfer / gift my Flat to all 3, in the name of 1) Dad  2) Mom & 3) Dad HUF equally.

what will be Tax implication in this Gift transaction.

1) will flat ownership in the hands of HUF is taxable ?? or it will be trated as Gift from relative and Tax free.??

2) Can income earn from HUF in future from this Flat, & gift this income to Dad individually ?? & treated as tax free from Gift ??

3) Can HUF gift me directlly income from this flat as Gift ?? is this income received from HUF to me treated as tax free being gift from relative ?? 

Please Guide

Suhas

Mr. Suhas

You automatically become a member of your Father's HUF.  You have made a planning by Gifting your 2/3rd portion of your property to your parents equally. Now, come on the question asked by you one by one:-

1. Gift to HUF will be taxable under the head other sources u/s 56(i)(vii). If you read the section, Any Immovable Property received by HUF without adequate consideration on or after 01.10.2009 shall be taxable as a Gift. Your Father HUF is require to pay tax on the "Value determined for the purpose of Stamp Duty".

Now, as regard question of definition of relative, there is no relative of HUF. Individuals are only covered in the definition of Relatives. For eg:- Father & Son, Father says that son is my relative & vice versa. This statement doesn't hold good for HUF.

This means you cannot gift your property to Father's HUF. You can transfer it after receiving adequate consideration.

2. Income earned by HUF from Property:- The answer of this question has been dealt by me earlier. I am producing the same for your reference. "Section 64(2) provides that if any person being a member of HUF transfers its property into the Pool of Assets of his HUF otherwise than adequate consideration, then the income is treated as the Income of transferror." Hence, the same is taxable in your hand.

Gifting/Transferring Income to your Father by Father's HUF:- Here, Section 60 & 64(2) consecutively came into force and again the Income is taxable in your hands.  

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3. If you received such a sum as a Gift, then Income is taxable 2 times:-

a. First time, in accordance with clubbing provisions in you hands under head House Property.

b. Second time, as per gift under head other sources in your hand.

Dear Vineet

Thanks for detail reply

But just few days back IT tribunal given status of HUF as a Group of relatives, should be come under relatives of others individually. I think if this case and its referance no. known to someone please post here. please read the following article But author has not given referance no. and party involve in such order.

https://www.business-standard.com/india/news/gifts-to-relatives-will-not-attract-tax/459614/

Now my question if I created 2 HUF one of my dad & other of My self, Can I create HUF of dad only with two members dad & mom and my HUF with two members Me & my wife OR I & my family become automatically members of my Dad HUF????

I think HUF is complicated and dealing in it only in movable and cash bank transaction is safe, in immovable properties it can create some problems & confusion

Regards

Suhas

Hey Vineet here is one Joke the party involve in this case his name is .......

https://taxguru.in/income-tax-case-laws/gifts-huf-exempt-562v-huf-gorup-relatives-itat-rajkot.html

Regards

Suhas

Ok..... I'll check that.... 

Mr. Suhas

One more thing, I think if you use this judgement, there is lot of chances that you will require to move to appeal as ITO's of Delhi level didn't follow such judgement as it is not dealt in Delhi's Tribunal Bench or High Court or Supreme Court.

But, I will check whether there is any similar judgement at Delhi level too and thanks.

Dear Vineet

You are absolutely correct, I am not going to do any in the name of HUF so finally I have decided to transfer flat in the name of dad & mom only as individual

reason for this is HUF is complicated concept.

May I have your opinion on

"  Now my question if I created 2 HUF one of my dad & other of My self, Can I create HUF of dad only with two members dad & mom and my HUF with two members Me & my wife OR I & my family become automatically members of my Dad HUF???? "

Suhas

Please guide on following as well

I already own one flat in mumbai say A - which can fetch me rent of say Rs 6 lac per annum, and I am planning to buy another flat say B in mumbai in the name of owner 1) my wife and 2) me jointly.

I will take loan on this second flat B, My 1st flat A is free from all loans and it is a free peroperty Now, & I am the sole owner of the 1st Flat A,

I am coming under 30% tax bracket

I can not stay in flat A after purchasing Flat B because Flat B can not fetch me such high rent, so finally I decided to rent Flat A  and buy second Flat B and Stay there

So Flat B will become Self occupied property and Flat A will become let out property.

Now how can I save my tax on this 6 lac per annum rent of Flat A, which is on my own name ??? overall guide on whole Tax planning ???

Suhas