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The #1 question: how do you get money into the HUF? You cannot just transfer from your personal account, that income will be clubbed back to you under Sec 99, Income-tax Act 2025 (old Sec 64) and taxed in your hands anyway.
Estate planning · HUF
Seeding a HUF: how to get money into it legally
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Provisions
Income Tax Act, Sec 92(2)(m) (old 56(2)(x)) | Clubbing provisions Sec 99 (old 64)
Analysis
Legal ways to seed a HUF: (1) Ancestral property received by inheritance goes into HUF automatically. (2) Gift from relatives outside the HUF (parents, in-laws). (3) Sale of HUF ancestral property, proceeds stay in HUF. (4) Business income earned by HUF as a business entity.
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- Ancestral property, inherited from grandfather or further ancestors
- Gift deed from relatives, parents, father-in-law, mother-in-law can gift to HUF
- Blended funds, if HUF gets property, all sale proceeds and reinvestment stays HUF
- NOT VALID: Personal savings transferred to HUF account (clubs back to you)
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