HUF: File form 15G only if income is below taxable limit

SC Vasudeva

Please advise how to avoid tax deduction at source on interest income accrued on an HUF FD account. There is no other income of HUF. Is Form 15G acceptable in such cases?— vs chaudhri, ias (retd)

Form 15G cannot be filed by an HUF if the income from interest credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income tax. Therefore, in case income of HUF is below taxable limit, it may be possible to file form 15G with the Principal Officer of the agency which is required to deduct tax at source.  There is no other way whereby such an agency would not deduct tax at source in respect of interest income accruing to HUF.

My son has formed an HUF with his wife and two minor sons with a cheque of Rs 10,000 given by me. I and my wife have further made contribitions of Rs 10 lakh each to this HUF on the birthday of my son's younger son. I and my wife are both pensioners and are regular income taxpayers. Kindly advise whether we can contribute to our son’s HUF regularly and if any documentation needs to be done? Is there any limit to our contributions in future and if so, what is the remedy?— RK saini

Section 56 of the Income-tax Act, 1961 (The Act) provides that when an individual or a HUF receives in any previous year, from any person or persons on or after the first day of October 2009 any sum of money, without consideration, the aggregate value of which exceeds Rs 50,000, whole of the aggregate value of such sum shall be treated as income of the recipient and brought to tax as income from other sources. This provision does not apply to a receipt by the HUF from any member of the HUF. In view thereof, the amount of Rs 10 lakh contributed by you and your wife, as both of you are not members of your son’s HUF, would be treated as part of the taxable income of the HUF of your son. It would be advisable to draw up a gift deed for the amount of gift contribution of Rs 10,000 as well as of Rs 10 lakh made by you and your wife. The maximum permissible limit is Rs 50,000 in a financial year, with regard to the receipt of gift from a person who is not a relative.

My daughter along with her family migrated to Canada and at the time of their leaving India, some of the LIC policies of my daughter and son-in-law were in existence. The branches concerned of LIC were informed in writing about their moving to Canada and to continue their existing policies. Later on, they got citizenship of Canada and this fact was also brought to the notice of the authorities concerned in writing. The premiums of these policies are being paid regularly and policies are running.

Now the LIC is asking every policyholder about their bank account details so that as and when any amount becomes due to the policyholder, that will directly be credited to his/her account. Kindly advise on the following points:

• Can they furnish their Canada bank account details to LIC?
• Will they have to open some NRI account in India and submit thereof details?— Balbir Singh Batra

It would be advisable to open an NRO account by your daughter in her name wherein the maturity amount of the policy can be deposited. It may not be possible for the LIC to remit the amount to Canada because of the foreign exchange regulations. The particulars of the bank account so opened in India should be made available to LIC so that the maturity amount can be deposited in such NRO account.

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