Tax implications for gift from father’s HUF to son’s HUF

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My HUF consist of me, my wife, one unmarried daughter a son. I wish to gift 15 Lakhs to my son’s HUF with consent to all the members. My son’s HUF consists of himself, his wife two minor daughters. Will this gift be treated as income for my son’s HUF? Will the income from such gift be clubbed with the income of my HUF?

Answer: As per Section 56 of the Income Tax Act the gifts received are not taxable in the hands of the recipient as long as the aggregate value of all the gifts received by a person during the year does not exceed fifty thousrupees. Once the aggregate amount crosses the threshold limit of fifty thousrupees, whole of the value of all the gifts received during the year become taxable in the hands of the recipient.

Gifts received from specified relatives are not treated as income. Members of an HUF are treated as relatives of the HUF for this purpose. So the gifts received by an HUF from any of its members is not treated as income of the HUF. Your HUF can not be treated as member of your son’s HUF. So the full value of the gift given from your HUF will be treated as income of your son’s HUF as the aggregate value of the gifts received by your son’s HUF exceeds the threshold of fifty thousrupees. The clubbing provisions apply when the gift is received by an HUF from its members as explained your HUF can not be treated as member of your son’s HUF, the clubbing provisions will not apply any income earned on this gift shall be taxed in the hands of your son’s HUF.

Balwant Jain is a tax investment expert can be reached at [email protected]

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