The following article was first published in the Mint newspaper on 7th December, 2022. The same was written by our Private Client team at Cyril Amarchand Mangaldas, who frequently publish their comments and opinions in the Mint. The online version of the article can be found here.
I want to transfer certain shares from my elder brother’s HUF (Hindu undivided family) account to my individual account as he is more than 75 years old now. I am not a member of his HUF. What is the legal procedure to transfer these stocks?
—Name withheld on request
Do note that the interest of any coparcener in HUF property at any time is an undivided interest, which cannot be specifically determined or crystallized until a partition or dissolution occurs.
An HUF can be wound up through its partition, which is usually done by agreement between all its coparceners. The property belonging to the HUF can be distributed / transferred to the concerned coparceners once the HUF is wound up.
In your case, given that you are not the coparcener of your elder brother’s HUF (nor the karta), you will not have any right to transfer the HUF property (i.e. the shares) to your account, upon its partition and winding up. Only the existing coparceners of your elder brother’s HUF will be entitled to its HUF property.
Given his advanced age, it maybe be helpful to discuss the partition of the HUF with him.
On a practical note, subject to the commercial understanding between the parties, the shares which your brother receives as a result of winding up of his HUF can be transferred / gifted to you. Do seek specific legal and tax advice on these aspects.
I am an Indian resident and my son is a permanent resident of Canada. I want to transfer my agricultural land to my son by way of a will. Can my son transfer the returns from this land to an overseas account. What are the rules and regulations for this as per the Foreign Exchange Management Act (FEMA)?
– Name withheld on request
Your query infers that your son is a non-resident Indian (NRI) and will inherit your agricultural property post your demise. Under the Indian exchange control regime, the transfer of agricultural property by way of a lifetime gift to an NRI (in this case, your son) by a person resident in India (you) is not permitted.
However, under the said regime, a person resident outside India can hold and own ‘any’ immovable property situated in India if such property was inherited from a person resident in India. Therefore, in your case, your NRI son can inherit the agricultural property in India – but this can only happen after your demise.
As regards the remittance of the agricultural income overseas, we assume that your son has an NRO (non-resident ordinary) account in India. It is worth checking with your son’s bank in relation to their policy on remittance of both agricultural income and current income. If they permit the same, it can be done from the said NRO account and will be subject to applicable remittance limits.
Furthermore, given that the exchange control regime is intricate and provides some scope for structuring, we would recommend consulting your bank and your lawyer before finalizing your plan.