X
    Categories: Income Tax

Gift To Huf By Member

Taxability of gifts is always a matter of anxiety, every person wants to know about the taxability provisions which would be applicable to him when receiving gifts from his near and dear ones. So let’s first consider what is considered a gift under the provisions of the Income Tax Act, 1961.

As per the taxability provisions, gifts can be classified as under-

  • Any sum of money received without consideration is termed as a ‘monetary gift’.
  • Specified movable properties received without any consideration, are termed as ‘gift of movable property.
  • Specified movable properties received at a reduced price, are termed as ‘gift of movable property for inadequate consideration.
  • Immovable property received without any consideration is termed as ‘gift of immovable property.
  • Immovable property acquired at a reduced price is termed as ‘gift of immovable property for inadequate consideration.

Taxability Provisions for Monetary Gifts Received by a HUF:

If the sum of money received as a gift from a HUF without any consideration exceeds Rs.50,000/-, then such sum shall be taxable in the hands of the recipient.

Provided that, monetary gift received by HUF will not be charged to tax if:

  • Money is received from relatives.
  • Money is received under a will or by way of inheritance.
  • Money is received in contemplation of the death of the payer or donor.
  • Money is received from a local authority.
  • Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution.
  • Money received from a trust or institution registered under section 12AA or section 12AB.
  • Shares are received as consequences of any corporate action being undertaken in the company.

Provided that, Relative of HUF for this purpose means any member of the HUF.

Taxability Provisions for Movable Property Received by a HUF:

  • Prescribed Movable Property Received Without Consideration

If the aggregate fair market value of the gifted movable property received by the taxpayer during the year exceeds Rs.50, 000/- the value of the movable property is charged to tax.

Provided that, movable property means shares/securities, jewelry, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the Taxpayer.

  • Prescribed Movable Property Received for Inadequate Consideration:

If, the aggregate fair market value of the gifted movable property acquired by the taxpayer during the year exceeds the consideration paid for these properties by Rs. 50,000/- the prescribed movable property shall be charged to tax.

Provided that, Movable property received by HUF will not be charged to tax if:

  • Movable property is received from relatives.
  • Movable property is received under a will or by way of inheritance.
  • Movable property is received in contemplation of the death of the payer or donor.
  • Movable property is received from a local authority.
  • Movable property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution.
  • Movable Property received from a trust or institution registered under section 12AA or section or 12AB.

Provided that, Relative of HUF for this purpose means any member of the HUF.

Taxability provisions for Immovable Property received/acquired by a HUF:

  • Prescribed Immovable Property Received Without Consideration

The Immovable Property received without consideration being a capital asset received by HUF the stamp duty value of which exceeds Rs. 50,000 is charged to tax.

  • Prescribed Immovable Property Received for Inadequate Consideration

The Immovable Property received for Inadequate consideration being a capital asset received by HUF  the consideration for which is less than the stamp duty value and the difference exceeds higher of Rs. 50,000 and 10% of the consideration, such immovable property shall be charged to tax.

Provided that, the immovable property received by HUF will not be charged tax if:

  • Movable property is received from relatives.
  • Movable property is received under a will or by way of inheritance.
  • Movable property is received in contemplation of the death of the payer or donor.
  • Movable property is received from a local authority.
  • Movable property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution.
  • Movable Property received from a trust or institution registered under section 12AA or section or 12AB.

Henceforth, the taxability provisions for gifts made by the member to the HUF are tax-free as they fall under the exceptions of the taxability provisions for gifts under the provisions of the Income Tax Act, 1961.

Have more concerns to discuss?
Team TaxReturnWala is here to support you with all your concerns relating to the tax implications of HUF
Email us at
info@taxreturnwala.com

Team TaxReturnWala: