Gifts: one direction is clean, the other is not
The two directions are not treated alike. A gift received by the HUF from any of its members is exempt from tax, because the definition of relative in Section 56(2)(x) expressly includes, for an HUF, any member of it. There is no monetary cap, so a member can gift money or assets into the family HUF without a tax charge on the HUF. This is the clean, statutory direction.
The reverse, a gift from the HUF to a member, is genuinely unsettled. The definition of relative for an individual recipient does not list the HUF, so on a literal reading the exemption does not cover it, and the tax office has in some cases treated such a gift as taxable in the member's hands. Tribunals have gone the other way, holding it exempt, either because an HUF is a group of relatives or because a member has a pre-existing right in the family property, making the receipt a capital receipt rather than income. Because it is unsettled, the safer course when a member is to draw value from the HUF is to route it as a partition or a documented capital receipt, not label it a plain gift.
When the HUF sells property
A sale by the HUF is taxed on the HUF, and this is often misunderstood. The HUF is a separate taxpayer with its own PAN, its own basic exemption and its own slab rates, so the capital gain on selling family property is computed and taxed in the HUF's return, not added to the karta's personal income. That separation can actually help, because the HUF's own exemption and slabs are additional to the members' individual ones.
The HUF also gets the reinvestment reliefs. It can claim exemption under Section 54, by buying another house, Section 54F, by investing the net sale value in a house, and Section 54EC, by putting up to ₹50 lakh in notified bonds, just as an individual can, with the usual conditions, for instance Section 54F is denied if the HUF already owns more than one house. So a family selling an HUF property plans the gain and its reinvestment at the HUF level.
The NRI angle: TDS and getting the money out
Where the HUF is non-resident, the sale mechanics change. A buyer of a non-resident HUF's property deducts TDS under Section 195 at the capital-gains rate and files Form 27Q, not the flat 1% Section 194-IA route that applies to a resident seller. As with an individual non-resident, the HUF can apply for a lower or nil-withholding certificate so the deduction reflects the real gain rather than the gross price, and can still claim the reinvestment exemptions.
Getting the proceeds abroad is the last piece. An HUF can hold an NRO account and repatriate up to USD 1 million a financial year from it, after tax, using Form 15CA and 15CB, now numbered 145 and 146. The NRE account, framed for individual non-residents, is generally not opened for an HUF, so the NRO route with the yearly cap is the usual path, and it is worth confirming the bank's current position. A practising CA sets the TDS certificate, files the HUF's return with the exemptions, and handles the repatriation for the NRI members.