Making reward of HUF property by a Karta

Can reward be given from HUF to the son though the son is a Coparcener?

There are not any restrictions on the rights of a Karta to reward property of the HUF to anybody underneath the tax legal guidelines. However, if the reward is made to a member of the family, the revenue tax division could deal with this as partial partition of the HUF and disrespect this for revenue tax functions. What it means is that the revenue arising from the gifted asset will proceed to be taxed within the fingers of the HUF despite the fact that the asset might need been bodily transferred to the member for his profit and pleasure. 

Under the Hindu Law there are particular restrictions on Karta’s proper to make reward of HUF property. A Karta can reward any movable property of the HUF for the needs like performing indispensable act of responsibility, aid from misery, for help of the household and for affection with out consent of different coparceners. The presents for affection may be made to any member of the household however the quantum of reward ought to be inside affordable limits. As far as presents of immovable properties are involved, the Karta could make reward of HUF immovable property just for pious functions and that too inside affordable limits. If all of the members and coparceners agree then there isn’t a downside in giving reward to any member or coparceners any property of the HUF however the revenue tax penalties as mentioned above will observe.

Balwant Jain is a tax and funding professional and may be reached on [email protected] and @jainbalwant on Twitter.

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