GIFT TO HUF BY RELATIVE OF KARTA

Dear Poddar:

Your query is not cler, Under what Act is your question directed? Please clarify exemption from what & why?

GIFTS ARE EXEMPT IN CASE OF BLOOD RELATIONS ONLY.

I PRESUME THAT YOUR QUERY IS RELATING TO INCOME-TAX IN INDIA. THE PRIMARY QUESTION IS

1. GIFT BY A PERSON TO THE HUF (WHEREIN THE KARTA IS THE RELATIVE OF THE DONOR).

IN THE GIVEN CASE THE NATURE OF RELATIONSHIP BETWEEN THE DONOR AND THE DONEE HAS TO BE ASCERTAINED. AS PER THE INCOME TAX ACT, GIFTS BETEWEEN THE BLOOD RELATIVES ARE EXEMPT UNDER THE LAW.

HOWEVER, IF THE RELATIVE (WHICH IS A WIDER TERM) MAY BE DISTANTLY RELATED, IN SUCH CASE, THE MAXIMUM AMOUNT PER ANNUM IS RESTRICTED TO RS. 50000/- FOR THE YEAR ENDED 31.03.2009.

QUESTION 2: GIFT BY THE MEMBER (I HOPE YOU KNOW THE DIFFERENCE BETWEEN THE MEMBER AND CO-PARCENOR) TO THE HUF TO WHICH HE IS ALSO A MEMBER.

THIS IS NOT REQUIRED UNDER ANY CIRCUMSTANCES, SINCE THE ACT PROHIBITS INCLUDING THE KARTA FROM TRANSFERRING ANY PERSONAL i.e. INDIVIDUAL ASSETS TO THE HUF SINCE IT MAY NOT BE REAGRDED AS TRANSFER. THEREFORE IT IS SUGGESTED THAT NO GIFT BE GIVEN BY ANY MEMBER OR CO-PARCENOR TO THE HUF WHEREIN HE IS THE MEMBER ./ CO-PARCENOR.

IF YOU DESIRE TO HAVE ANY FURTHER CLARIFICATION ON THIS POINT PLEASE REVERT TO THIS SECTION OF THE WEBSITE WITH YOUR FRESH QUESTION.

Dear All,

Can u guide me to a query :-

HUF owns a Flat / House which is given on RENT to the Karta of the HUF.

What will be the treatment of RENT in the Hand of  HUF as well Karta who pays the RENT ?

Presuming, Karta is in Service, can he claim RENT paid by him to his own HUF for calculating Salary Income.

What precautions / documantations will be required ?

Thanks & Regards

Dear Suren

Your query is already  answered

my father is alive and aged about 75 years IT assesse and paying taxes

will to gift/donate (cash/cheque)  to me and my sons

can I create a new HUF as on date I am also an IT assessee

by executing affidavit

Dear Mr Kamal

Answer to your query is simple. There cannot be a relitive to HUF as it is an artificial juridical person. Hence gifts received by HUF from any member, Karta or any other relatives of members are not exempt.

However, there can be a view that such donor relative is a "Relative" to all members of HUF who constitute the HUF, hence he may be construed as Relative to HUF also. This argument has so far not been contested in judicial forums and it will be interesting to see the outcome.

Dear Mr Suren

Karta has a different identity from HUF when it comes to IT matters. He is only a manager of HUF in so far affairs of HUF are concerned. He can have arms length transactions with HUF in his individual capacity.

So, HUF can very well rent out house to Karta. They should enter into proper rental agreement. Income in hands of HUF will be assessed from House property. Karta can claim rent paid for the purposes of HRA perk.

Dear MrR Ramesh Bapu

Your father can execute a gift deed in favour of you and your family. the money received will become corpus and joint stock property of your HUF.