Transfer of bonds using "CDSL reason code 31: Transfer between specified family member

Income Tax
1

Hello,

I am planning to transfer bonds using CDSL reason code 31: “Transfer between specified family members.”

The scenario is as follows:

  • The transfer is between members of the same HUF.
  • The grandson is the transferee, but his name is not explicitly mentioned in the existing HUF affidavit.
  • I understand that as per the law, the grandson is automatically considered a member of the HUF.

My specific questions are:

  1. Will the existing HUF affidavit (without the grandson’s name) suffice for compliance, or would a revised affidavit explicitly including his name be required?
  2. What specific proof/documentation is needed to establish the relationship as per CDSL guidelines for reason code 31?
  3. Will this transfer be considered tax-exempt under the applicable laws?

Thank you for your insights and assistance!

2

It is possible to transfer bonds between family members using CDSL reason code 31, ensuring smooth and secure transfers. By simplifying asset management, families can transfer ownership of bonds more easily. In order to maintain transparency and compliance, the transfer is conducted in accordance with regulatory guidelines.

3

Hey @Manish_N ,

  1. It is advisable to update the HUF affidavit to explicitly include the grandson’s name as a member. This can avoid any ambiguity or compliance concerns when transferring bonds under reason code 31.

  2. You could use the birth certificate as proof for the lineage of the grandchild or use the revised HUF affidavit.

  3. If there is no consideration paid for the transfer of bonds and it is between the members of the HUF then it will exempted from tax and the value of the same can be disclosed as exempt income.

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