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When Is The Income Of An HUF From Self-Converted Assets Liable To Be Clubbed In The Members’Hands In Case Of NRI ?

[How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children]

An individual governed by the Mitakshara school of Hindu law is entitled to convert his self-acquired property through his unilateral action of impressing such self-acquired property or separate property with the character of property belonging to an HUF or throw it to the common pot of the HUF. But such an action is not viewed favcurably by the Income Tax Law. It is provided in Section 64(2) that when any individual, who is a member of a Hindu undivided family convert his self-acquired property at any time after 31.12.1969 into HUF property, for the proposes of computation of the total income of such individual the income from the converted property is to be deemed to arise to the individual and not to the family. Because of the clubbing provision it is generally not advantageous for a Hindu to convert his self-acquired property into FIUF property. Rather, the HUF may receive gifts from non- members of the HUF. In the latter case, the clubbing provision would not apply. However, where a full partition is desired and several Hindu undivided families are to be formed by the full partition, it may be effected amongst the members of the family. Then each unit, headed by the major eldest male member with his own wife, and children, will be deemed to constitute a separate HUF. The individual who converts his self-acquired property into HUF property is deemed to have transferred indirectly his property to his spouse or minor child. The property allotted on partition to the major members of the family is not considered to be indirectly transferred by him to them and hence, the clubbing provision after partition does not apply in respect of such partition of the converted assets. A non-resident Indian can take advantage of this aspect of tax planning in those cases where he has grown up children who are in turn married and have their separate branches of HUF and where there is no separate HUF file for them.
How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children !
1. Income From Joint Accounts Or Joint Investments by NRI : Is it Liable To Be Clubbed For Tax Purposes in case of NRI ?
2. When is the income of wife liable to be clubbed with the income of her husband, and vice versa ? in case of NRI
3. When is the income of a Minor Child liable to be Clubbed with that of a Parent in case of NRI ?
4. When is the Income of Daughter-In-Law Liable to be Clubbed with that of her Father-In-Law or Mother- In-Law in case of NRI ?
5. Income of a Major Child cannot be Clubbed with that of his Parent in case of NRI
6. When is the Income Of An HUF From Self-Converted Assets Liable To Be Clubbed In The Members’ Hands in case of NRI ?
7. When is income from Assets Received on Partial Partition of an HUF liable to be Clubbed with the Income of the HUF in case of NRI ?
8. Joint Ownership Of House Property: Does It Make The Income Of A Husband, Wife, And Children Liable To Be Clubbed Together in case of NRI?
9.  How To Avoid Clubbing Of The Wife’s Wealth With That Of The Husband’s In Case Of NRI
10. Gift From Non-Relatives Now Taxed As Income In Case Of NRI

More... Topics !..


Tax Guide for NRI - Tax Planning, Tax Saving, Investment Guidance for Non-Resident Indians !

1. Basic Aspects Of Tax Planning For NRIs
2. How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children
3. The Incomes of an NRI completely Exempt from Income Tax
4. Capital Gain of an NRI could be Completely Exempt from Income Tax
5. Items completely Exempt from Wealth Tax for an NRI
6. Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
7. Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
8. Procedure for the Filing of Income Tax and Wealth Tax Returns, Assessment, and Refunds
9. Gifts by NRIs to Relatives and Friends can be made fully Exempt from Gift Tax
10. FEMA and NRIs Preliminary Aspects Analysed
11. Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
12. Permissible and Prohibited Current Account Transactions in Case of NRI
13. Investment In Shares, Securities, Units And Other Activities, etc. by an NRI in India
14. Deposits in India by an NRI
15. RFC account of a Returning NRI and Investment Abroad
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