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Is gift to brother’s HUF taxable?

 There is no bar for anyone to make a gift to his brother’s Hindu Undivided Family (HUF). Such a gift will be valid in law. However, the HUF will be liable for tax on the gift as income under Sec. 56(2)(vii) because a HUF, being a group entity, cannot have any relative. Since a karta or a member of HUF does not figure in the list of relatives of the donee under the second proviso to Sec. 56(2)(vii), tax cannot be avoided on such gifted amount in the hands of the HUF. If the gift were to be made to the brother, without the condition that it should belong to the joint family, there could be no liability for the brother as a gift from relative.

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