Gift on huf account

Income Tax Income from Other Sources
1

This video and vlogs is very useful.
I have one question, I have a huf account members are wife and child. If my mom give gift of 7 Lacks to my huf account every year is it tax free ?

2

Hey @Ajey_Giri

According to Section 56(2)(x) of the Income Tax Act, gifts received by an HUF from its members are exempt from tax. However, since your mother is not a member of the HUF, any gift from her would be treated as taxable.

Hope this helps!

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3

Thanks for the update, Then as per new taxation till 12 Lacks tax exemption. So we can get gift upto 12 Lacks is tax exemption. Is it correct ?

And one more question, in huf account gifting by member of huf is tax exemption but income or interest earned in huf account may be clubbing to the members right ?

4

Hey @Ajey_Giri

  1. In the case of a HUF, income up to ₹4 lakhs can effectively be tax-free, considering the basic exemption limit and applicable slab rates, although the HUF itself is not eligible for the Section 87A rebate.

  2. If a member transfers a personal asset to the HUF without adequate or any consideration, any income arising from that asset will be included in the total income of the transferring member under the clubbing provisions of the Income Tax Act.

Hope this helps!

1 Like
5

Thanks a lot… It’s very useful

6

It is possible to take advantage of certain tax advantages when transferring wealth to a HUF account (Hindu Undivided Family). Document the gift to avoid future disputes.

7

Hi @Ayushi_Joshi
Thank you.

For point 2: what about cash transfers using internet banking or cheques by members to HUF ?
How taxation will takes into the place on the interest or income generated on such transferred amount?
I am considering a case, where members transfers cash to huf and huf invests and trades in stocks using that cash.

8

Hey @Yogesh_Sonawane

If a member transfers cash to the HUF through internet banking or cheques, the amount is treated as a gift and is exempt from tax in the hands of the HUF. However, if the HUF subsequently earns interest income or generates capital gains by investing or trading in stocks using that transferred amount, such income will be clubbed with the member’s personal income under the clubbing provisions of the Income Tax Act.

Hope this helps!

9

What can be done to consider this as a loan and not gift.
I created loan agreement on stamp paper between huf and karta. But notary officer said, it need not be notarized, they don’t notarized such documents.
I am not sure if this is fine to have loan agreement on stamp without notarized.

10

Hey @Yogesh_Sonawane

It’s acceptable if the agreement is not notarized, as long as it is executed on stamp paper.

Hope this helps!

11

If it’s loan, is there any standard interest persentage is there as per government norms or we can make even low for 1% per annum

12

Thank you Ayushi for your reply.
Yes, it is executed on 500 Rs stamp paper. Signed by Karta of HUF (with stamp) and member who gave the loan.

13

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