21 July 2011
Mr. X is a doctor and is in practice. In his HUF there a credit amount has been received on which TDS is deducted (u/s 194J) i.e. professional receipts. Can I show income from professional receipts in HUF ???
21 July 2011
No. A Doctor is a professional in his own capacity. A HUF cannot be a professional. There can be a firm of doctors or a company of doctors, but HUF is not permissible.
31 July 2024
The scenario you’ve described involves an HUF (Hindu Undivided Family) receiving professional income, with TDS deducted under Section 194J. Here’s a detailed explanation of how this situation should be handled under Indian tax laws:
### **1. Understanding the Nature of Income for HUF**
**Professional Income:** - **Personal Nature:** Professional income, such as fees received by a doctor for medical services, is typically personal income. It is earned based on the individual's personal expertise and services rendered. - **HUF Income:** HUF income generally includes income derived from assets or activities owned by the HUF, such as rental income from property or income from investments. Professional income is generally considered to be personal to the individual practicing the profession.
### **2. Receiving Professional Income in the Name of HUF**
**1. ** **Income Attribution:** - **Personal Earnings:** Even if the professional income is credited to an HUF account, it is considered to be earned by the individual (doctor) and not the HUF. The income should be reported under the individual’s name. - **HUF’s Role:** The HUF is generally not recognized as a separate entity for earning professional income. It’s a family entity for managing joint family assets and not for individual professional earnings.
**2. ** **Taxation and Reporting:** - **Individual Reporting:** The professional income should be reported in the income tax return of Mr. X, the doctor, under the head "Income from Profession" (for individuals, it’s usually under the ITR-3 form). - **HUF Reporting:** The HUF should not report professional income. If any professional income is erroneously credited to the HUF’s account, it must be corrected to reflect the actual earner’s (Mr. X’s) income.
**3. ** **Expenditure and TDS:** - **Expenditure Deduction:** Expenses related to earning the professional income (if any) should be claimed by the individual (Mr. X) who earned the income. - **TDS Credit:** The TDS deducted under Section 194J can be claimed as a credit by the individual (Mr. X) in his personal tax return, not by the HUF.
### **3. Practical Steps to Take**
1. **Correct Income Reporting:** - **Transfer the Income:** Ensure that the professional receipts and related expenses are properly attributed to Mr. X. The HUF’s account should reflect only the income and expenses directly related to the HUF’s activities.
2. **Adjust Expenditure:** - **Claim Expenses Individually:** Any expenditure related to earning the professional income should be claimed by Mr. X, not the HUF. Even if the expenditure is paid from the HUF’s funds, it should be properly documented and claimed by the individual who earned the professional income.
3. **Update Financial Records:** - **Account Correction:** Correct any misattributions of income and expenditures in financial records to ensure accurate reporting in tax returns.
### **Summary**
- **Professional Income:** The professional income earned by Mr. X (doctor) should be reported in his individual tax return, not under the HUF. - **HUF Income:** HUF income generally comprises income from family assets and not individual professional earnings. - **TDS and Expenses:** TDS on professional income should be claimed by Mr. X, and related expenses should be reported by him as well.
In conclusion, professional income should not be reported under the HUF’s tax return. It should be reported by the individual who earned it, and any related expenses or TDS credits should be handled in the individual’s tax return. Ensure that all financial transactions are accurately reflected in the correct accounts to maintain proper tax compliance.
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