The Income Hindu undivided family a tax the Husband is Rs. Hindu undivided family a tax to an HUF comes from the status of the person in such family and so to be a part of an HUF, you must have lineally descended from a common Male ancestor. The Author is a Chartered Accountant by education and has been working in Securities Industry for more than 13 years with Stock exchanges and institutional brokerage firms.
How to form an HUF? Thus, it follows that a HUF is an entity consisting of a Hindu family, all of whose members are descendants of common ancestor.
They can choose to live separately. At that time, I used to wonder whether it is such an efficient means of tax saving by forming HUF. On the birth of any child, the HUF will also include the child as a member. This would include, Basic exemption limit on which no tax is levied of Rs. However, it is defined under the Hindu Law as a family.
What is so special about an HUF? These are some of the benefits that make HUF attractive. Also, while joint families were more prevalent then, one sees more nuclear families now.
Family income flows into a common pool, from which resources are drawn to meet the needs of all members, which are regulated by the heads of the family.
Since all lineal descendants are part of an HUF, every child, whether boy or girl, who gets added to the family, becomes a part of the HUF. Such individuals can route these payments through their HUF and thereby avail the benefit of deductions under these sections through their HUF.
Prior to amendment in Hindu Succession Act, the daughters were not co-parceners and could not demand partition. An unknown tax saving tool September 6, by Parameshwaran Narayanaswamy Taxpayers like you and me go to great lengths to try and save on taxes.
He also pays medical insurance premium for himself and his family of Rs. In the case of an HUF, the family continues to exist even when the common eldest ancestor dies. They also have a ancestral property from which they are earning rent of Rs.
So, if an individual is able to structure his taxable income or split his taxable income between his Individual self and his HUF, he can claim double benefits for deductions and expenses in both capacities, thereby substantially reducing his overall tax liability.
Under the tax laws in India, an HUF is treated as an independent person Separate legal entity for tax purposes and also assessed to tax separately as a distinct legal person.
Relations can be of equivalence, mutual respect or teasing in nature. An HUF can get too large to manage. Since an Individual and an HUF has similar benefits under the Income Tax Act,if a married individual can shift his income legally to his HUF, then he will have the benefit of much lower tax liability.
An HUF should have a legal deed. In such cases, the next eldest male member takes over as the head of the family. Karta of the HUF sits outside India. Paperwork required for forming an HUF?
The root of the Hindu religion is Sindhu or Indus valley civilization in the Indian subcontinent. It will continue to be taxed in the hands of the member. The greatest disadvantage of opening an HUF is that its members have equal rights on the property.
Benefits and Drawbacks of forming an HUF The major advantage of creating a Hindu Undivided Family Account is that the family gets an extra PAN Card and can split the family income and thereby resulting in tax saving and reducing the tax outgo.
As income and number of members grow, complications, too, increase. There are ambiguities even at the concept level, said Bhatia. Will HUF be a non-resident? Open Demat account in the name of the HUF. As per section 49 1 of Income-tax Act where assets are distributed on partition of HUF, then the cost of acquisition of such assets to the member shall be the cost of acquisition of such asset in the hands of HUF.
An HUF is formed by a family. This may be through investments made just to save taxes, irrespective of whether the product helps meet goals or not, or putting money in a scheme just because everyone else is. HUF consist of Father, sons and daughters. Usually the senior-most member of the family is considered the karta, the person who manages the affairs of the HUF.The Income Tax Department NEVER asks for your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts through e-mail.
Income Tax Department > I AM: HUF Income Tax Department > HUF. Hindu Undivided Family (HUF) under Income Tax Act of India. 1. Hindu Undivided Family (HUF) is treated as separate entity for the purposes of assessment under the Income-tax Act and Wealth-tax Act.
Find out HUF meaning, how to save Income tax by forming a HUF, how to open a HUF account and the hindu undivided family rules. A Hindu Undivided Family ("HUF") is a special feature of Hindu society, which today consists ofa common ancestor and all ofthat common ancestor's lineal descendants together with their spouses and unmarried.
HUF or Hindu Undivided Family is one of the most effective and legal ways for saving tax. The Income Tax Law provides the provision of HUF or Hindu Undivided Family by which you can save tax through proper planning and execution.
A very effective and legal way advised by chartered accountants to save tax is HUF i.e. Hindu Undivided Family. In India there are many families which are undivided and the incomes earned by such families are joint income as compared to Individual Incomes.Download