HUF withdrawals: taxes, legality explained

I am the Karta of a newly created HUF. If I receive gifts from non-members, invest the amount in bank FDs, and later withdraw the money, would this be treated as a partition? Can a Karta withdraw cash from the HUF account at any time?

- Mahesh Nayak

—Name withheld on request

Under Hindu law, each co-parcener has joint rights in the property of the HUF and therefore, a Karta can withdraw cash freely from the HUF Bank account for the regular expenses and maintenance of the family. However, if cash withdrawals are not for maintenance needs of the family (say, for investment by karta in his personal capacity), such withdrawal may be treated as a receipt by the karta, and as a partial partition of the HUF.