The Karta is the head of a Hindu Undivided Family (HUF). So, can karta transfer his property to HUF? The Karta can transfer his self-acquired property to the HUF, usually by way of a gift, and such transfers are tax-exempt under Section 56(2)(x) of the Income Tax Act, 1961. HUF members are deemed “relatives” for this purpose; thus no gift tax applies when Karta transfers property to the HUF, even without consideration.
However, although the gift itself is tax-free, the income generated by that property, such as rental income or capital gains, is clubbed with the Karta’s income under Section 64(2), and taxed accordingly until the HUF is fully partitioned.
Moreover, such transfers do not result in long-term tax savings for the Karta or the HUF because the clubbing provisions negate the tax benefits. In contrast, ancestral property or property acquired via a will transferred to the HUF avoids both gift tax and clubbing rules, allowing true tax benefit for the HUF.
Thus, while a Karta legally can transfer his property to the HUF, the move is often ineffective for tax planning, given that the income arising from that property remains taxable in his hands until partition.
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Can Karta Transfer His Property to HUF?
pragati
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3 months
2025-08-27T15:33:21+00:00 2025-08-27T15:33:23+00:00Comment
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