Are NRIs taxed on money gifted to a Hindu Undivided Family?
I am an NRI living in the UK and a member of my father’s Hindu Undivided Family (HUF). I have accumulated certain savings in my NRO bank account and want to transfer them as a gift to the HUF. Will it have any adverse tax implications for me or HUF?
– Name withheld on request
The gift of money from your NRO bank account to your father’s HUF will not create any tax liability for you, as a gift of money is not taxable in the hands of the person making the gift.
The taxability of receipt of the gift in the HUF’s hands, though, needs to be considered separately. Under the provisions of the Income Tax Act, 2025, money usually received by an HUF as a gift without consideration is taxable as ‘Income from Other Sources’. However, an exception applies where the gift is received from a ‘relative’. In the case of an HUF, its members are treated as its relatives. Since you are a member of your father’s HUF, the gift received from you would qualify for this exception. Accordingly, the gifted amount would not be taxable in the hands of the HUF.
However, the tax treatment of the income subsequently earned by the HUF from investing the gifted funds is different. Such investment income must be clubbed in the member’s hands for taxation purposes. Accordingly, any income earned by the HUF from investments made out of the funds gifted by you would be liable to be included in your taxable income.
Further, under India’s foreign exchange laws, receiving money from an NRI as a gift is not a restricted transaction.
I am an NRI providing financial consultancy services from Singapore to Indian clients. I had filed online Form 41 as my client had asked me to share a copy. However, while filing the form, I mistakenly attached my Tax Residency Certificate (TRC) for calendar year 2025. Can I file Form 41 again and attach the correct TRC for calendar year 2026?
-Name withheld on request
As per the FAQs issued by the Income Tax Department on Form 41 under the Income Tax Act 2025, you cannot revise/ edit Form 41 once it has been filed. However, the income tax e-filing portal currently allows Form 41 to be filed again. If you do so, the earlier Form 41 will become non-actionable, and the newly filed Form 41 will be treated as the valid form from the date of such re-filing for all purposes under the income tax law.
Accordingly, if you have received a TRC for calendar year 2026, you may refile Form 41 by attaching the correct TRC.
Harshal Bhuta is a partner at P. R. Bhuta Chartered Accountants
