Tax Q&A is your community hub for all things taxes. Whether you're looking to ask questions, share your knowledge, or connect with others who have unique insights, this platform has you covered. Explore Tax Q&A: qna.tax Here's more on HUFs: qna.tax/t/how-to-save-taxes-using-huf/5701
An HUF can build corpus at the time of incorporation. Any funds added at this time are treated as HUF's capital. Moreover, HUF can also accept gifts from its members. We have also covered this in the video at 9:00.
@@Quicko ok what if the HUF deed initially mentioned say 1L but now at the time of bank account creation you want to fund it with 10L. Where this initial money or corpus needs to be mentioned in HUF deed or lets say if deed is created with small amount mentioned in it few years back but you want to increase the amount how to do it? Thanks for prompt response!
so as a starting captial at the creation of the Huf can we transfor for example 50L form personal account like shares or Fd or pure cash netbanking transfor ? if yes any tax implication will aplican for that indiavitual account who transferred and also can wife and husband both share the amount while creating huf starting fund ?
Yes, assets can be transferred to the HUF at the time of its creation and there will be no tax implications. Moreover, all members can contribute towards the HUF's fund.
There seems lot of confusion on fund introduction to HUF by members. I have below two questions 1: If karta and member contribute say some amount as a initial corpus to HUF during its formation, i believe it will be non taxable at HUF, as its a gift by relative. But what will be tax implication on income generated on this income? will it be clubbed with karta income ? 2: what would be tax implications on same scenario as above where funds are transferred after HUF formation? Please note both questions are related to asset transfer as a cash.
The opinions vary on this one. As per our understanding of the Income Tax Act, - An HUF can build corpus at the time of incorporation. Any funds added at the time of incorporation is treated as HUF's capital and clubbing provisions shall not apply. This amount must be mentioned in the HUF deed as well. - After the 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. - However, if the members transfer any personal movable/immovable property to the HUF after its incorporation, any income generated from the property will be clubbed. It is recommended to take a second opinion as well.
Thank you for the reply. As you also recommended, i took second, third and almost five six opinions, and all others are saying otherwise that any fund transferred to HUF at the time of incorporation or after incorporation will be tax free at HUF but income generated on that will attract clubbing. I do not find anyone else who matches with what you are saying. Do you have any documentation proof for your saying? Additionally, would your services help in case any ITR notice attracts on such fund transfers and no tax paid by transferer? Thank you
@@yogeshsonawane28 Look , there are 2 aspects to this. 1) Is it a Gift to HUF or 2) Is it a loan to HUF . If it is a gift to HUF by any Member/Co-parcener/Karta then the income will be clubbed in the hands of that Member/Co-parcener/Karta . However if you gave loan to the HUF , the income will not be clubbed . Now the question is how will you prove that it is a Loan and not a gift , then Income tax will look at the your intention . If the HUF has the intention of returning the Amount after a certain time, and the Terms are well documented , then you can prove that it is a loan and no clubbing will arise .
@@yogeshsonawane28 If it is an ancestral property which has been transferred in the name of HUF at the time of incorporation, then any income generated on such property is taxable in the hands of HUF alone.
Is HUF formed automatically? (By operation of law?) For suppose the head of a family (Mr. A) has demised leaving his wife, son and daughter behind Say, after Mr.A's demise, the members have entered into a development agreement with respect to a land (to construct a building) which was originally purchased by Mr.A All the family members of Mr A had to sign the agreement because now that they are the legal members of Mr A Say after a period of time the daughter of Mr A has got married and has moved abroad After marriage, the property is now generating a rental income which is shared by all the family members Also the daughter continues to receive the rental income Now the question is: Is it mandatory to form HUF by all the three members? If so who can form it? Wife of Mr A? Or his son? Can they opt not to form a HUF? Can they opt to file ITRs showing the rental income in their individual names (ie, Rent ÷ 3) instead of the HUF which was not opted to be formed?
Tax Q&A is your community hub for all things taxes. Whether you're looking to ask questions, share your knowledge, or connect with others who have unique insights, this platform has you covered.
Explore Tax Q&A: qna.tax
Here's more on HUFs: qna.tax/t/how-to-save-taxes-using-huf/5701
Very Detailed information. All my questions pondering about HUF on my mind for many days were answered in just one video. Thanks a lot
Glad it was helpful 🙌
Great initiative 👏
The biggest question how to fund the HUF account? Where does the money come from to buy ipo or shares or property?
An HUF can build corpus at the time of incorporation. Any funds added at this time are treated as HUF's capital. Moreover, HUF can also accept gifts from its members. We have also covered this in the video at 9:00.
@@Quicko ok what if the HUF deed initially mentioned say 1L but now at the time of bank account creation you want to fund it with 10L. Where this initial money or corpus needs to be mentioned in HUF deed or lets say if deed is created with small amount mentioned in it few years back but you want to increase the amount how to do it?
Thanks for prompt response!
Nice End video , make more of those :)
More to come :)
so as a starting captial at the creation of the Huf can we transfor for example 50L form personal account like shares or Fd or pure cash netbanking transfor ?
if yes any tax implication will aplican for that indiavitual account who transferred and also can wife and husband both share the amount while creating huf starting fund ?
Yes, assets can be transferred to the HUF at the time of its creation and there will be no tax implications.
Moreover, all members can contribute towards the HUF's fund.
There seems lot of confusion on fund introduction to HUF by members.
I have below two questions
1: If karta and member contribute say some amount as a initial corpus to HUF during its formation, i believe it will be non taxable at HUF, as its a gift by relative. But what will be tax implication on income generated on this income? will it be clubbed with karta income ?
2: what would be tax implications on same scenario as above where funds are transferred after HUF formation?
Please note both questions are related to asset transfer as a cash.
The opinions vary on this one. As per our understanding of the Income Tax Act,
- An HUF can build corpus at the time of incorporation. Any funds added at the time of incorporation is treated as HUF's capital and clubbing provisions shall not apply. This amount must be mentioned in the HUF deed as well.
- After the 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.
- However, if the members transfer any personal movable/immovable property to the HUF after its incorporation, any income generated from the property will be clubbed.
It is recommended to take a second opinion as well.
Thank you for the reply.
As you also recommended, i took second, third and almost five six opinions, and all others are saying otherwise that any fund transferred to HUF at the time of incorporation or after incorporation will be tax free at HUF but income generated on that will attract clubbing.
I do not find anyone else who matches with what you are saying.
Do you have any documentation proof for your saying?
Additionally, would your services help in case any ITR notice attracts on such fund transfers and no tax paid by transferer?
Thank you
@@yogeshsonawane28 Look , there are 2 aspects to this. 1) Is it a Gift to HUF or 2) Is it a loan to HUF . If it is a gift to HUF by any Member/Co-parcener/Karta then the income will be clubbed in the hands of that Member/Co-parcener/Karta . However if you gave loan to the HUF , the income will not be clubbed . Now the question is how will you prove that it is a Loan and not a gift , then Income tax will look at the your intention . If the HUF has the intention of returning the Amount after a certain time, and the Terms are well documented , then you can prove that it is a loan and no clubbing will arise .
@@yogeshsonawane28
If it is an ancestral property which has been transferred in the name of HUF at the time of incorporation, then any income generated on such property is taxable in the hands of HUF alone.
@@hemanthrajakuncham it is not about property.
Is HUF formed automatically? (By operation of law?)
For suppose the head of a family (Mr. A) has demised leaving his wife, son and daughter behind
Say, after Mr.A's demise, the members have entered into a development agreement with respect to a land (to construct a building) which was originally purchased by Mr.A
All the family members of Mr A had to sign the agreement because now that they are the legal members of Mr A
Say after a period of time the daughter of Mr A has got married and has moved abroad
After marriage, the property is now generating a rental income which is shared by all the family members
Also the daughter continues to receive the rental income
Now the question is:
Is it mandatory to form HUF by all the three members?
If so who can form it? Wife of Mr A? Or his son?
Can they opt not to form a HUF?
Can they opt to file ITRs showing the rental income in their individual names (ie, Rent ÷ 3) instead of the HUF which was not opted to be formed?
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We've taken a note of your feedback.
can salary earning person , who married , can form HUF ?
Yes
Yes, any married person can form an HUF irrespective of their source of income.
@@Quickodidn't you mention salaried income won't be eligible, as it is based on the skills of the individual?
Most of them don't know about these
2:20
What about Christians?
As per the Income Tax Act, HUF can only be formed by Hindu, Jain, Sikh, or Buddhist families in India.