Create an HUF deed and save taxes legally.
Create an HUF deed and save taxes legally.
The term HUF stands for ‘Hindu Undivided Family’ and comprises of all descendants of a common male ancestor and includes their wives and unmarried daughters. The term of HUF is not defined in income tax law; it is defined under the Hindu Law as a family.
The family continues to exist even after the death of the common ancestor and the next eldest male member becomes the head of the family or the “Karta”. In financial terms, we can call him ‘manager of the family’. Even on the death of all the male members, the HUF continues to exist.
The term ‘Hindu Undivided Family’ (HUF) is defined under Hindu Law. so it can’t be created by an agreement between two parties, nor can it be formed by a group of people who do not constitute the family. Buddhists, Jains, and Sikhs can also form HUF.
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One of the major benefits of the Hindu Undivided Family is that it is considered a separate legal entity. This entitles HUF to obtain a separate PAN card and bank accounts in the name of the HUF.
monetary gift up to INR 50000 may be received in cash, cheque, draft, etc by an individual/ HUF is free from income tax. Also, a gift by Karta to his daughter on her marriage is expmted from taxation.
HUF is very easy to form. It comes into existence merely by a HUF Deed. It is a formal legal document on a stamp paper which clearly states the names of the ‘Karta’ and the co-parceners (other members)
By creating an HUF, you get an additional PAN Card which would be legally acceptable as well as to avail the tax benefits. As the new PAN CARD in the name of an HUF is created, the family can pay its tax individually.
Each member has an equal right to the property owned by an HUF. New members that get added to the family by way of birth or marriage also have an equal share in the property. An even unborn child in the womb of the mother will have equal rights.
Inheritance can be accepted in Hindu Undivided Family’s name. The legal heir would have a vested interest in the legacy after the death of the person who made the Will, his children are also considered legal heirs to the property so inherited.
Complete a Simple Checklist
Drafting of HUF deed
Verification of Documents
Drafting & Executing HUF Deed
Obtain PAN & TAN
Birth of a son in a Hindu joint family automatically makes him a member of the HUF. In view of this, all male members and unmarried daughters automatically become members of the HUF. In addition to that, if a child is adopted, then he also becomes a member of the HUF. Moreover, upon marriage, a wife becomes a member of her husband’s joint family.
No HUF arises only from status.
Yes. A family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters.
It is the property, which a man inherits from any of his three immediate male ancestors, i.e., father, grandfather, and great-grandfather.
Yes. As so long as the property which was originally of the joint Hindu family remains in the hands of the widows of the member of the family and is not divided, HUF can continue with female members.
Gift by Karta of HUF, a movable property or an immovable property within reasonable limits in favor of his daughter is permissible on the occasion of her marriage.
All members; A son in the womb of his mother at the time of partition; Mother; Wife.
No. A single person cannot constitute HUF. There have to be minimum two members to constitute a HUF.
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