Create HUF to save tax & Format of HUF Creation Deed
- Tuesday, May 22, 2012, 7:55
- Income Tax
- Articles
1. Under the Income Tax Act, an HUF is a separate entity for the purpose of income tax return.
2. The same tax slabs are applicable to HUF as to individual assessee.
3. You can not transfer your own assets/money into HUF.
4. If you have ancestral property and earning some income from this property, then it is better to transfer this asset to HUF and save tax up to exemption limit applicable to individual.
5. You can transfer the money received on sale of ancestral property /assets into your HUF.
6. The income from property of HUF can be further invested in instruments such as shares, mutual funds, etc. and will be assessed under HUF.
7. Existence of property or multiple members is not a pre-requisite to create HUF. A family which does not own any property may still have the character of Hindu joint family. This jointness is understood in terms of faith and food. This is because as a Hindu is born as a member of the joint family.
8. Any gifts received by the members of HUF (birthday, marriage, etc.) can be treated as assets of HUF.
9. The HUF is taxable as separate person under income tax hence one can save tax from basic exemption of Rs. 1.5 lakh. HUF will also gain from the tax slab structure of computing income tax.
10. Apart from basic exemption of Rs. 2 lakh, section 80C deduction up to Rs.1 lakh is also available.
11. For example, if you are in 30% tax bracket, then approx tax saving by creating an HUF will be as follows:
- Basic exemption up to Rs. 2,00,000 = nil
- Rs. 2,00,000-5,00,000 @10% = Rs. 30,000
- Rs. 5,00,000-10,00,000 @20% = Rs. 1,00,000
- 80C deductions Rs. 1,00,000
- Therefore total tax payable for HUF on income of Rs. 5,00,000 is only Rs. 30,000.
- If this income of Rs. 5,00,000 is taxed in individual hand @ 30% tax due is Rs. 1,50,000.
- Hence, you can save a total of Rs. 1,15,000 by creating an HUF and transferring ancestral property income and other income under HUF.
DECLARATION
I, ____________________________ son Of ___________________________________ Residing at ____________________________________________ aged ___Adult do hereby declare-
- That I am Karta of ____________________________________________
- That I received on behalf of the H U F gift of Rs. ___________ by way of CASH/CHEAUE from my FATHER ________________________________(name of relative of karta of HUF) on dt. _______________ this formed the corpus of the HUF.
- That the HUF at present is consisting of the followings members-
I) Shri _____________________, Adult, Residing at _________________
II) Smt. _____________________, Adult, Residing at _________________
III) Kumari _________________-Minor, Residing at ___________________
- That the above statements are true to the best of my knowledge & belief. Declare this on _________________
WITNESS: Signature
1. ————————————–
————————————
2. ————————————– (_____________________)
—————————————————————————————————-
—————————————————————————————————————-
FORMAT- II
[To be executed on Rs. 200 Stamp Paper in Maharashtra]
DECLARATION OF GIFT MADE BY ________________________
TO THE HINDU UNDIVIDED FAMILY OF ___________________
I, _____________________________, residing at _______________________ ____________________________________________________________, do hereby declare and affirm as under:
1. That out of natural love and affection borne by me towards the Hindu Undivided Family of ______________________________, I have made a gift of Rs.______ (Rupees _________________ only) as per the following details:
By Cheque No.________, dated __________, drawn on Bank ____________________, ________________ Branch, in favour of ________________________ HUF.
2. The above Gift has been duly accepted by ________________________, as Karta of his Hindu Undivided Family and has been duly acknowledged hereunder.
3. This Declaration of Gift is made to record the fact that I have made this Gift in favour of the Donee as above, who now has the absolute right, title and interest in the gifted amount.
Date: ___________, 200__ ___________________
(Signature of the Donor)
ACKNOWLEDGEMENT OF GIFT
I, ________________________, hereby acknowledge having received the above gift made to my Hindu Undivided Family by _________________________.
Date: ___________, 200__ ___________________
(Signature of the Donee
as Karta of his HUF)
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I need to download the format and the features of HUF accounts..Can I get it..?
HUF accounts provide additional tax saving for those families with income from ancestral properties…I would like to downlowad these articles/formats..can I get it..?
I am not been able to understand what actually you need. Do u need some more info on HUF?
Dear sir,
I want to creat HUF A/c. I do not have anyone to gift for my HUF. Can I (karta) give Interest Free loan to my HUF A/c ? If yes, then the bank interest earned by huf will only taxable, if there is no other income/business ? Also what will be effect on my individual IT return ?
Pl reply.
Thanks in advance.
If you give Loan as Interest Free then it should be out of your interest free fund. Although clubbing provisions not applicable in respect of Loan by Individual to Huf but ITO is surely add the same to income of Individual.
Instead of giving loan you gift the amount to HUF and it will not have any effect on your Income Tax Return.
HUF being a group of Individuals can not have any blood relations , however the existance of HUF is based on existence of Individuals. Without Individuals there cannot be any HUF . As such , in my view the word Relative used in section is also in relation with HUF and gift received from any relative of any member of HUF should not be taxable .
Hi Sandeep,
Thanks for reply. What is the limit of Gift that i or my any relative can give to my huf ?
Thanks in advance.
Dear Umesh ,
Please read our article on gift from relative available at following link :- GOT A GIFT FROM A RELATIVE ? NO TAX ON IT
Dear sir,
my father died on august 2006,
my three sisters were married before the year 2001,are they still the co parcenors in my fathers h.u.f property,as per the new amendment of 9.9.2005
I purchased a flat in Delhi through bank loan, which is now fully paid. The flat is on rent, the income is added with my salary income and taxed. Now I want to create HUF and want to gift this flat to my HUF. Is it possible and how?
I am a married man ,i did not hve any child yet can i make huf for my self. please let me know about the rules how to make huf firm so that zi can tell to my c.a ,as he says that I can not make my huf firm if I did not have any child.
Child Not Required to create huf:- As per Guwahati High court in the case of Arjun Kumar Jhunjhunwalla & Sons(1997) a Single male member, after marriage can form HUF.
Even with daughter you can form huf:- Even in SC in Surjit Lal Chhabda case has ruled that Male member with wife and unmarried daughter can form HUF.
Also in Madras High Court in the case of R. Subramania Iyer opined that “…Creation of Hindu Undivided Family is a God Gifted phenomenon. As soon as a married Hindu gets a Child, a new HUF, undisputadely comes into existence.
hi thanks for info.can karta and head of huf gift to huf from hid assests.thanks
Thanks for detailed information on HUF. May I know one thing ? My father’s HUF is going to be dissolved & partitioned. He has three major sons, their wives, gransons, their wives. Will all these members get the share ? Father really wants to distribute HUF’s assets in above manner.
I am creating a HUF with my wife, son and daughter. My wife and her grand mother are legal heirs for my in-law properties and shares. In law has immovable property and shares. Both mother-in law and father-in law were passed away. My question is, can i attach/take the assets from in-laws into the newly created HUF?
whether Declaration, Declaration of gift made, Acknowledgement are required to be executed on non-judicial stamp paper and what values at Noida (U.P.)? Till HUF is formed, can Karta open savings a/c in a bank anf have PAN?
Thanks for sharing such a information
I want to know where can a HUF save in regards to section 80c (1 lakh) tax savings. i know we can take NSC but what other can be taken.
my friend father expired on 2/3/2010 & he was having ag.land in his name.after trf. the above property in my friends name,can he create HUF from that date.He is married & having 2 sons also.He is today only individual assessee only & want to create HUF after father death.Please answer ,its urgent.The ag. land was priveously in name of my friends grandfather, then to father & now to his name.
i want a loan on my huf from a bank can i have it without any collateral security for my day to day business
In my family, have myself, my wife and one daughter. So, can I create HUF ? There are only three members including karta. Out of one is only daughter.
In HUF if Karta is senior citizen then what will be slab?
Is it same as senior citizen, i.e. Exempted upto 2.4 lakh
reply
a family business carried by father and a son & family consist of wives of above & grand children
can they form HUF?
i want to creat my on huf can i creat by gifting my personnel assets into my huf assets.
Can an Individual give personal Asset to his own HUF and create HUF? For Ex: Mr. X gives say 1 lac Re. as Gift to Mr. X’s HUF. X’s HUF consists of Mr.X, Mrs. X, Daughter.
Pl advice.
When will the admin of this site reply?
Hi- Maintaining such a big site with no profit motive takes a lots of time so its not possible for me to reply all the questions. Kindly bare with me.
I appreciate your motive and understand your difficulty Sir! Just wanted to know the time frame to expect the answer.
All the Best! Thank You.
Why dont you post your question to expert section . Where our expert reply to the questions posted to them
cab karta or head of family gift any amount to HUF and in the gift deed what he will write for HUF name. suppose mr. ram is married and wants to create HUF. ram wants to gift rs. 10,00,000 to huf. now in the gift deed what ram will write.
purana HO GAya…………..
update karo
I have existing H.U.F account formed in 2006.I want to know can my mother who is also member of HUF can gift to
my HUf account what would be the tax implications.
Dear Sir,
I am getting Income by commission on sale. Can I split the same income in HUF and Indiviual returns ????
Is any problem on spliting income from Income tax point of view ???
Dear Mr. Sandeep,
i am having my single and HUF account in HDFC Bank. i would like to have internet banking which include my both account. Now can i transfer my HUF money into my individual account legally. Please guide urgently.
To avoid future litigation’s its better to pay from individual account only.
Hi,
I already have a HUF, pan card and an account but never got the deed. Can i still get the deed done? Do i need to get the deed?
* Do I need to get it done on Stamp Paper or on a plain paper as shown in the format. Please advise me how to execute it ?
* I dont live in Maharashtra, do i still need to get the DECLARATION OF GIFT MADE?
The ammount was gifted two years back.
Please advise
Sir,
I would like to ask, if suppose a person doesnot have a son, can he not create an HUF? If answer is in affirmative, then what are the basics requirements that need to be fulfilled?
I am married with two sons. if i want to have HUF Status. need i have to register with any regulatory or are there any formats , how do i open abank Account and register myself as an asseesse under IT act as HUf
Dear Sir !
Can you give the complete details on Formation & running of HUF
sir,
I have a huf account and given interest free loan to my huf account. which my huf has fixed deposit in bank. will there be interest clubbing provision for me in future. also my huf income is less than tax slab so i have not return file for it. pls advice.
dear,
you have given loan to your huf account. Further HUF diposited it into FD or Bank account. It is clear that you transfer your fund/assets to HUF without any or sufician considration so it is your own fund. Subsequently section 64(2) will apply to you. and interest income will be included to you. you self liable to pay tax on interest if your net income is more than limite.
furthe you asked that if HUF has not taxable income than it is essential or not to file return. the section 139(1) says that any indivisual, HUF has net income more than exemption limite is lible to file Income Tax Return. in your case HUF has income not more than exemption limite so you not lible to file return.
Sir,
That my friend had no parents this time.i want to know than how can he creats huf. they are total 4 members infamily 2+2.
kindly reply
You can invest 1 Lac in Mutual Fund Tax Plan & enjoy 80 cc benifit
I have taken tax free loan from my dad from his retirement benfits by cheque which i have not paid back. I have put my funds in my huf as tax free loans which can be clubbed under section 64(2) so can i make adeed by my father saying my dad has given the loan amount paid to me as gift to my HUF from date of huf formation. and the rest money which i have given to huf can i make a gift deed by myself karta to my huf and avoid clubbing provision.Give me ur email id or contact no for any further consultancy.
how a salaried person can get benefited with HUF I am any way having tax deducted at source by 30 % Please guide???
Dear Sir
With due respect, I do not think that any deed is required to form an HUF. A HUF is created after marriage and one can receive gifts from anyone. In fact
Sir I want to create HUF of my father and my mother has a house property in her individual name. I also have a sister who is married. whether the property in my mother’s name get automatically converted into HUF property and After the death of my mother is it possible that my sister claims the partition out of the said propery, my mother also has a will to transfer the property in my name and the will is registered
Can any Hindu adult Male create HUF ? Whether a Bengali Bramhin Adult Male will be able to create HUF ? Please advise.
I’m the Kartha and have an HUF a/c.
Various deposits have been made by my parents to this a/c as gifts. I have never made an deed so far for opening or operating this a/c (HUF creation deed) nor has any ‘Declaration of gift’ ever been made as the bank never asked for same.
Kindly confirm if both these documents need to be issued for every transcation.