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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 ?

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

One of the important methods of tax planning in India has been to make a partial partition of the assets of an HUF so that the income of the family is divided amongst various hands in such a manner that the least income tax is paid by the HUF and the members of the HUF taken together. Hence, partial partition of an HUF after 31.12.1978 has been de-recognised. It is provided in Section 171 (9) of the Income Tax Act that where a partial partition takes place amongst the members of a Hindu undivided family after 3 1.12.1978, such a family shall continue to be liable to be assessed under the Income Tax Act as if no such partial partition had taken place’. Further, each member or group of members of such a family immediately before such partial partition and the HUF shall be jointly and severally liable for any tax, penalty, interest, fine or any other sum payable under the Income Tax Act by the family in respect of any period, whether before or after such partial partition. Hence, tax planning requires that there should not be any partial partition of a Hindu undivided family. If at all partition becomes necessary, then full partition under the provisions of Section 171 may be made amongst the different members of the family. Thus, from the point of view of proper tax planning a non-resident Indian like any other resident person should never make a partial partition of the assets of his undivided family of which he may be the Karta or Manager. Rather, if he has major sons in the family he may make full partition of the family so that his major sons in turn may have their independent and separate HUFs.
 
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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