HUF stands for Hindu Undivided Family and it is a great option for individuals for tax planning.
A HUF can be registered in India at an offer price of ₹1,890/- Only (Inclusive of taxes)
HUF stands for Hindu Undivided family & governed by Hindu law board. The expression “Hindu Undivided Family” has not defined under the Income Tax Act or in any other statute. HUF could be formed by a married couple or by members of a joint family. To form a HUF minimum two members are required & at least one among whom should be a male member of the family. Senior most male member of the family would become ‘Karta’.
Although it is governed by the Hindu law board, it can be formed by Jains, Sikhs and Buddhists as well. It is a body consisting of persons lineally descended from a common ancestor and includes their wives and unmarried daughters, who are living together, joint in food, estate and, worship (not now necessary). The daughter, on her marriage, ceases to be a member of her father’s HUF and becomes a member of her husband’s HUF. However, after 1-9-2005, daughter married or unmarried, is a coparcener like a son.
Key Benefits of HUF
- Every member of the family can deposit their income in the common corpus.
- Single person’s authority while participation from the entire family.
- Gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account, but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.
- Corpus can be used for investment in tax-free money instruments.
- Corpus can be divided only on agreement of every coparcener of the family.
- The Income Tax Act recognizes the HUF as an independent assessable or taxable entity. Hence, HUFs enjoy all deductions and exemptions under the IT Act independent of the income and tax liabilities of its members. A separate Income Tax Return is filed under Income Tax Act.
- Tax Saving- For example- an ancestral property that yields rental income. Under normal circumstances, the rent will be attached to a person’s income and will be taxed according to that individual’s tax slab. However, if it is transferred to an HUF, the income will be that of the HUF’s and will be taxed separately.
FAQs for HUF Registration
The head of the HUF is called the Karta, which is the senior-most member of the family.
Yes, Until January 2016, a woman could not be the Karta of HUF. But in a landmark case, the Delhi High Court ruled in favour of a female being the Karta of HUF.
TaxRodo provides the virutal services, which means there is no compulsion for you to be present at our office physically. A scanned copy of documents can be uploaded or sent via mail, and we will handle the rest.
We will draft the HUF deed and help you in getting the PAN card for your HUF.