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Can gifting amounts help me generate income tax-free within the basic exemption limit?

T S Khurana |398 Answers |Ask -Follow

Tax Expert - Answered on Nov 04, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by PRAVEEN on Oct 25, 2024Hindi

Money

Thanks for your reply sir. Understood that karta can donate any amount to huf but any income generated by that amount will be taxable in hands of karta. Then no use of gifting amount. Thats why my plan is to take gift from other persons upto max 3 lacs per annum and show it as income in itr. As basic exemption limit is 3 lacs, no tax to be paid. Like that in 2 to 3 year 10 lakhs corpus will be created. Then i can generate income by investing in stocks, fds

Ans: 01. You are justified in concluding that any amount donated by karta, will be subject to clubbing provisions u/s 64 of Income Tax Act.
02. Any gift from other sources (other than relative) is exempt up to a maximum of Rs.50,000.00 in a year. You may proceed in the way you have suggested.
Most welcome for any other clarifications. Thanks.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Good morning Sir, I am Karta of HUF. Other members (coparcenors) are my two daughters and wife. Income of HUF is from agriculture and interest. My questions are (1) Whether all above members are eligible to receive tax free gift from HUF ? (2) Is it necessary to give same amount of gift to all members ? (3) Can HUF deposits amount to PPF account of wife and can HUF claim for 80CC benefit for that? (4) Can wife has equal rights in HUF as others ? I will be highly thankful to receive above answers.

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Hi Mihir, hope you are well. I want to create an HUF (Karta) with my wife + 2 minor daughters (members). The main purpose is to save tax by creating FDs in HUF. We want to have a good corpus there eventually (2 crore +) so that income generated by HUF can be used by us to cover our yearly expenses. I have a few questions. 1. If both me and my wife transfer some money (don't know what would be the best way - gift, loan or just transfer as initial capital) say 25 lakh each to HUF which we will then put in FD. Will the interest on this FD will be taxable in the hand of HUF or it will be clubbed with me and my wife's income. Both me and my wife are in 30% tax bracket. 2. What is the best (tax efficient) way to take out money from HUF and use it.

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Question by PRAVEEN - Oct 15, 2024Hindi

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Sir, i got huf pan. But heard that corpus building is tedious task as any gift amount above 50,000 is taxable. For huf basic exemption limit is 3 lacs in new tax regime. So, can i take 3 lacs gift from my father and show under huf exemption limit in itr as income? Thanks in advance. Any reply is highly appreciated.

Ans: 01. Your father can gift you Rs.3,00,000.00 without any tax implications.
02. You may in turn, gift the same amount to HUF, again without any tax implications. It has no connection with the Income or Basic Tax Exemption Limit of HUF.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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