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Can gift be given from HUF to the son although the son is a Coparcener?

There are no restrictions on the rights of a Karta to gift assets of the HUF to anyone under the tax laws. However, if the gift is made to a family member, the income tax department may treat this as partial partition of the HUF and disregard this for income tax purposes. What it means is that the income arising from the gifted asset will continue to be taxed in the hands of the HUF even though the asset might have been physically transferred to the member for his benefit and enjoyment. 

Under the Hindu Law there are certain restrictions on Karta’s right to make gift of HUF assets. A Karta can gift any movable property of the HUF for the purposes like performing indispensable act of duty, relief from distress, for support of the family and for affection without consent of other coparceners. The gifts for affection can be made to any member of the family but the quantum of gift should be within reasonable limits. As far as gifts of immovable properties are concerned, the Karta can make gift of HUF immovable property only for pious purposes and that too within reasonable limits. If all the members and coparceners agree then there is no problem in giving gift to any member or coparceners any assets of the HUF but the income tax consequences as discussed above will follow.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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