Can I open an HUF account with salaried income (only one source of income) and housewife, unmarried Daughter? However, I am investing on some mutual funds on my Wife (Housewife) name and there are some capital gains on the investment.
Opening a HUF account is not dependend on the source of Income. The HUF can be formed of family members who are lineal descendants of a common ancestor like parents, children, grandchildren, and so on, and have a common property that they collectively own.
The income earned by individual members of the HUF is reported under their respective ITRs. The HUF itself may have income from the joint family property, which is reported separately under the HUF’s Income Tax Return.
In the scenario you mentioned, your salaried income would be reported under your individual ITR, and the income earned by your housewife and daughter would also be reported under their respective ITRs.
HUF profession business is share market trading .
HUF is paying salary to karta . and claiming it as business expense from the profit .
HUF is paying property Maintenace , electricity etc as the premises and the electricity is used for the business . so claiming these expenses etc as business expenses from the profit …
HUF is doing all the transactions from the savings bank account and not from the current bank account !
QUERY :
Is it ok to do all the transactions with the savings bank account ?
or is there any comparative advantage in using the current bank account ?
@Sakshi_Shah1
@Bharti_Vasvani
@Shrutika_Shah
@Muskan_Balar
@CA_Niyati_Mistry
Hello @HIREiN
As per RBI guidelines, Savings Bank Account shall not be used for commercial or business transactions. It is always advisable to use Current Bank Account as it does not have transaction limit making it more convenient for business and commercial transaction.
i do not have much transactions , so is it ok if i use the savings bank account ?
what does the income tax rule say : is it ok if i use the savings bank account of the HUF ?
Hello @HIREiN
There’s no specific rule under the Income Tax Act. But, it is always advisable to use Current Bank Account for all the business related transactions irrespective of number.
as you said : there is no rule but advisable to use current account rather than savings account .
THE itch is :
banks don’t pay any interest on the money lying with the current account . and Banks levy charges , folio account maintenance fees etc on the current account .
BUT . in the savings account ; banks don’t levy any such charges . and banks also do pay interest on the money lying with the savings account .
then ; why would i open the current account for HUF trading ? and there is no rule or law prohibiting me from operating from savings bank account !
am i right ?
Hello @HIREiN
Yeah, there is no such rule or prohibition but to better manage the transactions and due to no limit on number of transactions it is recommended to use current bank account.
Hello,
My father is no more, we sold one of the property that was in his name. Recently we formed an HUF with my Mother as karta, and we all sibling as co-parceners. Can we bring money received from sell proceedings into our HUF considering the property belonged to our father and we all are direct descendants?
Hey @SANKET_POSAM,
The legal heir/nominee of the property will be liable to pay tax on the capital gains that will arise from the sale of the property. Moreover yes, the members can bring in capital from sale of such assets to the HUF.
Hope this helps!
1 Like
Thank you @Surbhi_Pal for the answer.
Consider a scenario where in I form an HUF for my family and, me and my wife contribute say 1 lakh each as a capital to HUF. I understand the clubbing provisions will come into effect. Now say those 2 lakh earns 1 lakh and gets reinvested and earns another 1 lakh(i.e. 3 lakh earning 1 lakh). Now from income tax point of view, this profit of 1 lakh is taxable in the hands of Me, My wife and HUF equally. Is my understanding correct? If yes, is it the same applicable to NRI families?
Hi,
My grandfather-in-law (80 year old) has an HUF account in which he is the Karta and his wife and daughter-in-law are the only other members (his son passed away last year). In case something were to happen to him, who can now become the Karta of this HUF? I want to be prepared for this eventuality in advance and take actions now in case this creates complications later. Can you please advice on who can become the Karta after him? Also, what sort of documentation would be required in advance for this?
Hi @VirajGada
In this case, you can take advice from a legal professional.
We will be able to help you with your tax-related queries.
@Shrutika_Shah
@Sakshi_Shah1
@Bharti_Vasvani
HUF is having business profession of share-market !
HUF is paying salary to the “Karta” ! and HUF is claiming it as business expenses in the books of accounts .
Query :
can HUF also pay : food bills , clothes bills , life insurance . Mediclaim insurance ; etc ;: of and for “KARTA” and claim as business expenses ?
Hi @HIREiN
You can only claim expenses that are wholly and exclusively incurred for the share market business.
Hey @Punit_T,
As you are a member of the HUF, any shares that you transfer to the HUF in the form of a gift will not be taxable in the hands of the HUF. However, when the shares are sold, the capital gains will be clubbed with your income.
Hope it helps!
testDoes interest free loan or loan at .5% to huf attract clubbing provisions. Loan provided by karta
Hey @Vineet,
When an HUF is formed, the members can pool capital in the HUF and transfer money 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. You can provide loans to the HUF as well, but in that case It is not ideally recommended to give interest-free loans. You can charge a minimum interest as prescribed by the RBI.
Hope this helps!