Wednesday, March 21, 2012

HUF CAN RECEIVE GIFT FROM MEMBER WITHOUT ANY LIMIT :BUDGET 2012


on Wednesday, March 21, 2012

Under the existing provisions of clause (vii) of sub-section (2) of section 56 any sum or property received by an individual or HUF for inadequate consideration or without consideration is deemed as income and is taxed under the head “Income from other sources”. 

However, in the case of an individual, receipts from relatives are excluded from the purview of this section and are therefore treated as not taxable. The definition of relative as given in this sub-clause is only in relation to an individual and not in relation to a HUF.

It is therefore proposed to amend the provisions of section 56 so as to provide that any sum or property received without consideration or inadequate consideration by an HUF from its members would also be excluded from taxation.

This amendment will take effect retrospectively from the 1st day of October, 2009.

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  1. Whether a HUF can give gift to members of HUF?

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    Replies
    1. It is advisable to avoid gift from HUF to members. If at all it is required to tranfer funds from HUF to member, the same should be for some specific purposes and consented by all members, and the donee member should continue to be member / co parcner is remaining properties.

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  2. IT Tribunal Rajkot in case of Vineetkumar Raghavjibhai Bhalodia Vs. ITO (2011) held that gift received from HUF by a member is exempt.

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  3. whether a father can make gift to his son huf ?
    if yes then what would be the provisions regrading taxability of gift ?

    ReplyDelete
    Replies
    1. There is no bar in income tax to make a gift to any body .Accordingly father can make gift to son's HUF but as father is not a member of son's HUF it is taxable in the hand of HUF and added in the income of huf ,if amount is exceeding 50000 in a year.

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    2. can the karta of huf make payments for his individual travel abroad from the huf account ?

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  4. Yes, it should be ok to do so from huf account.

    ReplyDelete