- CA Sandeep Kanoi
- | Income Tax - Articles- Featured- Trending |
- 04 Mar 2020
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Hindu Undivided Family (‘HUF’) is treated as a ‘person’ under section 2(31) of the Income-tax Act, 1961 (herein after referred to as ‘the Act’). HUF is a separate entity for the purpose of assessment under the Act. Under Hindu Law, an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. An HUF cannot be created under a contract, it is created automatically in a Hindu Family. Jain and Sikh families even though are not governed by the Hindu Law, but they are treated as HUF under the Act.
In this article, I am covering some important points related to HUF, its taxability and its assessments alongwith format of HUF creation deed.
Key points in creation of HUF and format of deed for creation of HUF
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. 2.5 lakh. HUF will also gain from the tax slab structure of computing income tax.
10. Apart from basic exemption of Rs. 2.50 lakh, section 80C deduction up to Rs. 1.50 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. 2,50,000 = nil
- Rs. 2,50,000-5,00,000 @5% = Rs. 25,000
- Rs. 5,00,000-10,00,000 @20% = Rs. 1,00,000
- 80C deductions Rs. 1,50,000
- Therefore total tax payable for HUF on income of Rs. 6,50,000 is only Rs. 12,500.
- If this income of Rs. 6,50,000 is taxed in individual hand @ 30% tax due is Rs. 1,95,000.
- Hence, you can save a total of Rs. 1,82,500 by creating an HUF and transferring ancestral property income and other income under HUF.
Note: An HUF is liable to pay Alternate Minimum Tax if the tax payable is less than 18.5 per cent (including cess and surcharge) of “Adjusted Total Income” subject to prescribed conditions.
12. The following incomes are not taxed as income of HUF:-
- If a member has converted or transferred without adequate considerationhis self-acquired property into join family property, income from such property is not taxable in hands of the family.
- Income of impartible estate (though it belongs to family) is taxable in the hands of holder of estate and not in hands of HUF.
- Personal income of the members cannot be treated as income of HUF.
- “Stridhan” is absolute property of a woman, hence income arising therefrom is not taxable as income of HUF.
- Income from individual property of daughter is not taxable in hands of HUF even if such property is vested into HUF by daughter.
13. An HUF is recognized as a separate assessable entity under the Act. Its income may be assessed if following two conditions are satisfied:
- There should be a coparcenership. In this connection, it is worthwhile to mention that once a joint family income is assessed as that of HUF, it continues to be assessed as such in subsequent assessment years till partition is claimed by coparceners.
- There should be a joint family property which consists of ancestral property, property acquired with the aid of ancestral property and property transferred by its members.
Please note that Property obtained by daughter from joint family property would be her absolute property. Any income therefrom is chargeable to tax in her hands in the individual status only. This will also apply to any legal heir obtaining property in the capacity of a descendent.
FORMAT OF HUF CREATION DEEDS
FORMAT-I
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
- —————————- ————————————
- —————————- ———————————–
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)
(Republished with Amendments)
Also Read- Creation of HUF – Tax Planning Advantage
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In Maharashtra, the HUF deed is to be executed on how much Rs. stamp paper?? In case Male Karta dies can the widow be the Karta?? The suggested Format II needs compulsory to be executed? Can Karta himself a gift to HUF? then he has to sign at both places? How much would be the minimum corpus?
I have a HUF Pan Card and I have been filing my HUF Return from 1980 onwards.But I have no deed. Now how to make a deed
formate of HUF deed.
I have a HUF PAN Card and bank and since 1988, but no deed. After my death who will get the assets and money belonging to the HUF?
MY REQUEST HOW TO PROCESSING IN HUF ACCOUNT
CALL ME -9909694037
Please furnish us H.U.F DEED- FORMAT ASAP.
My father expired 15 years back. He had his own HUF and it was carved out of my grandfather’s HUF. The partial partition of my father’s HUF was done in 1985 and sanctioned by AO. But my father’s as well as my grandfather’s HUF did not had pancard. How can I get pancard issued for these HUF? Who can sign as donee?
HOW TO AMEND THE HUF DEED…
WHETHER IT TO EXECUTE NEW DEED OR AMENDMENT MADE IN OLD DEED
TAX SLAB RATE SHOWS 250000 TO 500000=@5%IS Rs. 25000/-
The amount of tax for the above slab is 12500/-
please modify the amount mentioned above.
CAN YOU TELL US THE PROCEDURE OF CHANGE OF KARTA IN HUF? WHO CAN BE KARTA IN HUF IN CASE OF HUF CONSISTING OF HUSBAND,WIFE AND TWO SONS?
can an HUF render accounting services and earn fees.
i vinod mantora resideing in mumbai(Maharashtra) wants to give gift of Rs. 11000.00 ( Eleven Thousand Only to mr. Dharmesh parekh residing at Dholka (Gujrat ) due to love and affaction towards him and his family as karta of huf namely Dharmesh Manubhai Parekh H U F so how i can and how to make gift deed so the gift can be utilised for his h u f.He has not have any huf a/c . shall i give him gift so he can creat h u f I am not his relative. i am well wisher for his family
please help me.Vinod Mantora mobile no. 9322227361
hi send me PDF format
100 RS stamp paper
how to huf name creation deed format only
plz
reply…….ans
hi i can assist you in this matter , please contact me on my
e-mail efillingajitesh@gmail.com
We have four floor in a single building and want to gift two floor out of those to HUF,its an ancestry property.
Which format we should use to form an HUF and to gift property in HUF from individual ?
Would it be legal as per Income Tax ?
Is it neccessary to make a deed everytime one makes a deposit into HUF.
For examples,
If my mother gives my HUF account a cheque of eg 2 lacs , Can I deposit it as is or do I need to make a deed to show a proper legitimate transaction.
Again if I have some amount in FD’S which I want to withdraw and deposit into my HUF account , do I need a to make a deed for that OR can i deposit cheque from mine to my HUF ACCOUNT AS IS.
Someone was saying with deed the transaction becomes permanent and we give up rights to that money , which cannot be taken back by us . Without deed it is a temporary transaction where one can take back the money any time and there is no legitimacy in transaction.This is then applicable for tax authorities .
PLEASE ADVISE AS DO NOT UNDERSTAND HOW TO PROCEED.
if income was cross the limit of rs.10,00,000.00 then huf account apply service tax or not?
hi on wat value of stamp paper should a declaration deed be formed for an huf in new delhi 2) can a woman be a karta even if male is alive 3)if male is karta can it be provided in deed that the woman members also have the authority to manage funds, 4)is huf fd is made in name of karta huf or can be done in name of all adult members, 5)who can an huf make a nominee in its bank fds,6)after an huf is made after wat period can the karta relinquesh his right to management in favour of another member say his spouse who is the senior most after him
good to learn. But clarity require to understand exact procedure :
1.In case when Karta expired, whether new deed is require ? If no addition or deletion of family members.
2. In case if addition of members to be made after death of Karta, what is the procedure to be followed to keep bank account continue and to keep demat account continue ?
Awaiting your reply.
How much much amount can be gifted to HUF ,and by who all .What is the tax liability.
My father has transfered his HUF to me.
Can I make another HUF in my own name. i.e. can I have 2 HUF?
I Advise you while excuting HUF please go to Advocate . Not to CA.
Since C.A. has only expertise in tax laws , but Advocate has expertise in Hindu Law.
Tax laws are supplementry to main hindu law.
After 2000 there is no anscestral property system, as hindu law it dissolve automaticaly in individual share
i have created huf and obtained PAN Card .How i will show all our assests and FDS in the return. FDs are last two years
Rajiv A Punjabhi ,
This is a matter of controversy because upon marriage of a female, she will no longer be a member of the father’s HUF.. The decision and interpretation is in the hands of the assessing officer
Mr.Sunil,
Usually the eldermost person will be the kartha, and also as per the IT act gifts can be transacted b/w the individual members and the HUF(considered as relatives).
But as you have a daughter, remember that upon marriage she will no longer be a member of your HUF, instead she will become a member of her husband’s HUF.
This is a matter of controversy
Rajib Chakrobarty,
any male, married person of the Hindu religion can create his own HUF
Hema,
gifts b/w the individual members and the HUF are not liable to tax. But remember, once the individual transfers a property to the HUF, that person loses his authority over it. Because it is now the property of the HUF and all the members therein have a right
Dear Rajib
Yes you could form HUF.
Dear Sunil
My answer to your queries are given hereunder :
1) Yes
2) Yes
3) You and your wife could gift to any other member of HUF in a particular occasion and that gift will become HUF property. There is no limit of such gift but sources need to be disclosed.
4) No
sbanerjee076@gmail.com
In my opinion, HUF is a status enjoyed by every Hindu. Each hindu male individual, immediately upon getting married, gets this HUF status and his hindu undivided family starts.
Hence the HUF is status which every married hindu male person enjoyed. It is only in the eye of Income-tax we recognise this status. Else it is in any case available since marriage.
The gift deeds and other documents are just to satisfy banks to open a bank account etc because of lack of awareness on their part, else the marriage certificate is good enough to claim the status.
CA Nilesh Gupta
nileshgupaca@gmail.com
i am a bengali my question is can I create HUF file….?
NAMASKAR SIR,
I AM govt employee AND MY WIFE IS A GOVT. TEACHER, I HAVE 1 CHILD (FEMALE 3 YEAR).
NOW I WANT TO FORM HUF AND I WILL BE THE KARTA OF THE HUF…… MY QUESTION IS AS FOLLOWS :
1. MAY I FORM HUF ?
2. I WILL BE THE KARTA?
3. CAN WE (ME AND MY WIFE) CAN GIFT TO HUF? AND HOW MUCH? THERE IS ANY LIMIT?
4. INCOME FROM HUF IS CLUBBED IN ANY OF US (ME AND MY WIFE) ?
THANKS AND REGARDS
dear sir,
my wife is govt teacher but as per rule govt employee is not authorised for doing other business.i want to create insurance agency on my wife name .can i create insurance agency on my wife name in HUF account .she is eligible .pls clear
dear sir,
Iam 34 yrs.I have one daughter. we are ruled by hindu dayabhaga school.can i make ancestral HUF in my name
hello sir, I have a family of three members. i am an individual tax payer and am retired and a senior citizen .I am now interested in starting a HUF with myself as the KARTA of it.
could you please tell me if I will still be able to get taxed individually and separately along with being the karta of the HUF which will also be taxed after its creation??
Also if I gift any amount to the HUF account , will it be exempted from my individual income ( like the way PPF is exempted from taxation on individual income )
SIR
My father is in Govt Job. My younger brother started business. Now we can make a HUF in name of my father along with Govt. job.
Dear Sir.
My question is that my father in law has given a gift (in the form of cheque) to my my daughter i.e. his grand daughter from his HUF account.
Is that amount taxable?
Kindly clarify.
Regards
Rajiv A Punjabhi
rajivapunjabhi@yahoo.com
NAMASKAR SIR,
I AM ADVOCATE AND MY WIFE IS A GOVT. TEACHER, I HAVE 3 CHILDREN (1.ARNIMA FEMALE AGE 11YEAR, 2.ARYAM MALE AGE 8 AND 3 SIDDHI FEMALE 3 YEAR).
NOW I WANT TO FORM HUF AND I WILL BE THE KARTA OF THE HUF…… MY QUESTION IS AS FOLLOWS :
1. MAY I FORM HUF ?
2. I WILL BE THE KARTA?
3. CAN WE (ME AND MY WIFE) CAN GIFT TO HUF? AND HOW MUCH? THERE IS ANY LIMIT?
4. INCOME FROM HUF IS CLUBBED IN ANY OF US (ME AND MY WIFE) ?
THANKS AND REGARDS
(ASHISH KAMTHANIA)
9258010105
KAMTHANIYA@GMAIL.COM
can HUF give a gift to one of the members of HUF
I Want to create a HUF Constitution Deed & I am facing littlebit issue to decide Format of HUF Constitution Deed, please let me know if any format of deed but without any gift transaction enter it.
I am retiring this month. how can i form huf.what formalties wiil have to be done. can i transfer my funds to HUF even being KARTAand invest that money in Bank FDs. what will be its taxibility as an individual and that of Karta
I am retiring this month. how can i form huf.what formalties wiil have to be done. can i transfer my funds to HUF even being KARTA
Sir,
Can a government servant create an HUF to get tax benefits from bank’s fixed deposits?
sir, presently i do our propritorship bussiness, cai i make huf firm by in the name of me, ihave wife, with 2 childrens. please suggest me
1- 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 ?
2- Want to know that Vikram Shah Individual can give git to Vikram Shah HUF ??
if any tax applicable or not ??
3- If Individual can gift to HUF than what is Maximum Limit for the gift
Sumit
Hi,
1- 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 ?
2- Want to know that Vikram Shah Individual can give git to Vikram Shah HUF ??
if any tax applicable or not ??
3- If Individual can gift to HUF than what is Maximum Limit for the gift
Sumit
Dear Sir,
If Individual can gift to HUF than what is Maximum Limit for the gift
Vikram Shah
Surat
Dear Sir,
I Want to know that Vikram Shah Individual can give git to Vikram Shah HUF ??
if any tax applicable or not ???
Please reply thanks
Dear Ashok,
Yup one can definitely gift to his HUF. Cheers. 🙂
Thanks
Dear Bibek,
Its not the high time, don’t worry, u can still do ur HUF deed done.
Thanks & Regards
Dear Sandeep,
U can definitely do that until n unless ur job appointment letter restrained u from such act.. 🙂
Thanks