Forming HUF and its taxation

[Surbhi_Pal]

Hi @paarvvv,

@paarvvv

As per clubbing rules, if any member transfer asset to HUF, income earned from the said asset is to be clubbed to the transferor.
If at the time of formation Karta along with members transfer let’s say 2Lacs rupees (not ancestral) and invest in shares and earn Capital gains. Will this be clubbed to the income of transferor of money ?

Any money pooled in at the time of formation of HUF is considered HUF’s capital and clubbing provisions will not apply here.

@paarvvv

If income generated from the funds accumulated at the time of formation of HUF is not subject to the clubbing rules. Will any further gift in form of money be liable for clubbing rules ?

After the HUF is formed, the members can pool capital in the HUF and transfer capital as a gift. Gifts from members are exempt in the hands of the HUF and the HUF can use this capital to generate income, clubbing will not be applicable here. However, if the members transfer any personal movable/immovable property to the HUF, any income generated from the property will be clubbed.

@paarvvv

If a third party give as a gift of upto Rs 50,000 in form of money. Is there any tax implication or disclosure required in ITR ?

If the amount is above ₹50,000 it’ll become taxable, if less than ₹50,000 you can disclose it in exempt income while filing the ITR.