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T. Banusekar

MY HUF (Hindu undivided family) consists of my wife, my two minor children and myself. My father proposes to give a gift to the HUF. Will the income received from such gifts be clubbed and taxed in my hands?

V. D. Datar

Reply

Though the clubbing provisions will not apply to gift received by your HUF from your father, with the amendment to Section 56 of the Act with effect from April 1, 2005, any gift received on or after September 1, 2004, in excess of Rs 25,000 will be treated as the income of the recipient, which will be taxed under the head `income from other sources'.

The HUF will, therefore, have to pay tax at the appropriate slab applicable to it.

The income that is generated out of the gift in later periods will, however, be taxed only in the hands of the HUF and will not be included in any other person's hands.

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