pawan choudhary (propreitor) 20 May 2010

Can HUF give Taxfree gift

- Can any HUF take a taxfree gift from its members( i.e. member of same HUF) ?

- Or can a child's HUF ( HUF of son) take taxfree gift from its parent's HUF (Father's HUF) ?

- Or can a parent who is not the member of a child HUF give Gift to child HUF .i.e. can a child HUF take taxfree Gift from the parents of family who are not the members of child HUF?

- Or can any HUF have a taxfree gift from any body above Rs,50,000/-.

Please help and comment.

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2 Replies

Rakesh Dubey (Advocate High Court Calcutta) 21 May 2010

Huf can make a gift to its any member of it huf and that gift is tax

Vineet (Director) 23 May 2010

Unfortunately u/s 56 of Income Tax Act, while the sum received by Individual and HUF without consideration (Gift) have been deemed taxable, the definition of Relative for the purpose of exemption has been made in relation to Individual only.

So strictly speaking there is no relative defined for HUF and the definition of 'Relative' being exhaustive, the same cannot be further stretched in respect of HUF. Hence, the sums received by HUF are not exempted under this category and neither the gift from HUF to any member be benefited by this exemption as HUF per se does not fall under the definition of Relative.

Let's hope some judicial order widens the scope of definition of Relative to those donees who pass the test of Relative definition for all members of HUF.