My father, S. Sundar, had an ICICI Bank HUF account in the name of S SUNDAR HUF, where he was the Karta. After his demise, the bank advised me to get a new HUF PAN card in my name, so I obtained one as ASWIN S HUF. However, after submitting the new PAN, the bank is now asking me to continue with my father’s HUF by changing the Karta of his HUF account to my name. I am puzzled and frustrated by the bank’s actions. I have been struggling with this issue for a long time due to the lack of support from the bank.
Could you please guide me on whether I should continue with my father’s HUF account or open a new HUF in my name?
If KARTA and one of the copersoner ( KARTA’s wife ) each of them give interest free loan to HUF say for 10 years , will it be needed to document in notarized form or simple white paper loan agrrement is needed before transferring the amount to HUF ?
OR
how it could be differentiated that it is not gift and only LOAN to HUF if such query arises ?
Thank you very much for this thread from where we can get many information which not available readily.
I have a question on building corpus in my recently created HUF. I understand that I can start with my parental property sell consideration to start as HUF corpus. We also received a large amount of money on demise of my mother-in-law through nomination which is currently laying in my wife’s bank account. Can we transfer this amount to our HUF to build a corpus further without any tax/legal complication? I and my wife both are salaried person.
Waiting for your reply.
This amount can be transferred to the HUF. As you are a member of the HUF, this can be treated as gift in the HUF’s hands and hence, will also be exempted from taxes.
@Quicko Dear sir, this refers to your reply mentioned above “An HUF can build a corpus at the time of incorporation. Any capital raised and contributed at the time of incorporation is treated as HUF’s capital and clubbing provisions shall not apply.” how you will prove that capital is raised while incorporation only and wht is referred as date of incorporation like when we apply for PAN or at the time of opening HUF bank account or affidavit date prepared for pan ".pls clarify thanks
@Quicko awaiting your reply… what will happen to HUF and Karta , if HUF returns back 10L to karta, how it is handled in IT returns for both HUF and Karta? Or nothing to be mentioned in both books.
If any of the HUF members or karta gifts shares to HUF demat account, then is there any problem if HUF sells gifted shares? Clearly the karta’s intention is to get capital gains taxed in hands of HUF Account rather than getting taxed in hands of karta. Is there any setback in this case for the karta if such transaction happens.??
As per Technical Guide on Taxation of HUFs by The Institute of Chartered Accountants of India any amount gifted to HUF by member can address clubbing provision , so if i invest in stocks or FD , member has to pay tax on earnings
Link :ICAI - The Institute of Chartered Accountants of India
HUF can buy shares from the gifted money , Section 64(2) of the income tax act, income from such assets like dividends or interest will be clubbed with the income of the person making the gift.
An HUF can build a corpus at the time of incorporation. Any capital raised and contributed at the time of incorporation is treated as HUF’s capital and clubbing provisions shall not apply.
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.
Based on the above, I have two queries and would appreciate your guidance in this regard.
a. Does that mean at the time of incorporation of HUF account i.e before even applying for the PAN card, in the agreement itself, I need to mention initial capital of the to be formed HUF account ? Lets say, we mention 50K at the time of incorporation.
b. After the HUF is formed, .i.e when I get my PAN card and apply to a bank for opening HUF account I can also deposit lets say another 50K ? Which will make the capital of HUF 1 lakh after I finally get my HUF bank account ? That too without any tax implications ?
Hi this seems to be an old video, Now women can become a karta, and I am a women, what are the changes on making an HUF? I have two children, one son and Daughter, Is it manditory to make both my chidren coparceners as i want to add only my daughter to my HUF
I think there was a recent Delhi High court ruling on this but I’m not sure what are its overall legal implications.
From my limited reading, Regarding excluding the son from being a coparcener, I think it is not possible. @Quicko will be able to explain this in detail.
If I transfer funds from my personal bank account to HUF and then those funds generate income say FD interest, will clubbing be applicable here or I can take tax benefit ?
Also, can I transfer dividend yielding shares from my personal demat to HUF’s demat account, again will clubbing of income be applicable here or I can take tax benefit ?
There could be different views on how clubbing provisions apply in the case of HUFs. As per our understanding,
An HUF can build a corpus at the time of incorporation. Any capital raised and contributed at the time of incorporation is treated as HUF’s capital and clubbing provisions shall not apply. Hence, the interest generated from FDs will not be clubbed.
However, if the members transfer any personal movable/immovable property to the HUF, any income generated from the property will be clubbed. As shares are considered movable property, if you transfer them to the HUF, any income generated will be clubbed in the hands of the member.
It is generally understood that clubbing provisions apply to a HUF for income generated from assets transferred, but income from income is not clubbed. This is written in several websites, but I could not find this in the bare act. From where is this concept of non-clubbing of ‘income from income’ derived?
Clarificaition from capital gains: Let’s say I transfer an asset (say MF) to my HUF worth 3.25L, which was acquired for 2L 2 years ago. I then promptly sell the asset for fair value. 1.25L will then be taxable in my hands as LTCG, I suppose. What happens to the 3.25L that the HUF will get? WIll the entire income from 3.25L be clubbed in may hands, or just income from 2L?
(Variant of (2)) - If I transfer 1L to the HUF today, who invests in equity. After 1 year, it becomes 1.3L. When I sell, the LTCG of 30k will be taxable in my hands, fair enough. Out of the 1.3L in the hands of the HUF, income generated from 1L will be taxable in my hands, and income from 30K will be in the hands of the HUF. Is my understanding correct?
I have another question - My HUF was formed on the date of my marriage, which was in December '23. I am registering the HUF now. If I send the amount recieved as wedding gifts, will clubbing provisions apply? Can I present it as though the wedding gifts went to the HUF?