I have been residing in the UK for the past 12 years. My parents and one sibling are residents of India. My father had formed a HUF several years ago, with all four of us as members, and he serves as the Karta. I require funds, and my father has decided to transfer some funds from HUF to my UK bank account. This transfer will be made out of the rental income earned from letting out the HUF property on which TDS has been deducted. I would like to know whether this amount would be taxable in India in my hands?
—Name withheld on request
Since you have been living in the UK for the past 10 years, I have assumed that you qualify as a non-resident for Indian income-tax purposes.
From 1 April 2026, the Income-tax Act, 2025 (ITA 2025) has replaced the Income-tax Act, 1961. While the section numbers have changed under the new law, the overall position relevant to your query remains broadly the same.
As per section 92 of ITA 2025, any sum of money received without consideration, exceeding ₹50,000, is taxable in the hands of the recipient. Although there is an exemption for amounts received from specified relatives, an HUF is not treated as a “relative” of its members when a member receives any sum from the HUF. So, at first glance, it may appear that the amount received by you from the HUF could be taxable.
That said, there is a specific exemption under Schedule III of the 2025 Act for amounts received by a member from an HUF, provided the payment is made out of the income of the HUF. If the proposed transfer is clearly sourced from the HUF’s rental income, then such a receipt should not be taxable in your hands, regardless of the ₹50,000 threshold or the fact that an HUF is not regarded as a relative under Section 92. In my view, the Schedule III exemption, being directly applicable, would prevail over Section 92. Since the income is not taxable in India, there should be no need to rely on any tax treaty relief.
Separately, from a foreign exchange perspective, it is important to note that the Liberalised Remittance Scheme does not apply to HUFs. This means an HUF cannot directly remit funds abroad to a non-resident member under this route. Instead, an individual member of the HUF can remit the amount to you as a gift under LRS. Such a transfer should not give rise to any tax liability under the 2025 Act, apart from TCS, if applicable.
Harshal Bhuta is partner at P. R. Bhuta & Co. CAs