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As per the definition of ‘Person’ under section 2(31) of the Income Tax Act, 1961, which includes :

(i) an individual,

(ii) a Hindu Undivided Family,

(iii) a company

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority,

(vii) every artificial juridical person, not falling within any of the preceding sub clauses.

Out of the above, we would like to discuss about Hindu Undivided Family in this article

Looking to the population of our country, major portion is of Hindu, and looking to this in mind under the constitution of Direct Taxes Hindu Undivided Family has been given a separate status. An assessment of HUF is also being done separately. The purpose of this that all the Hindus can have their separate status of HUF and it over and above Individual. Under the Income Tax Act, the income and wealth of HUF is to be shown separately and save tax.

Under the Income Tax Act, there is no separate definition of HUF. Under the Hindu Act, joint family consists of common ancestor and all of his descendants, including their daughters and wives are considered as members of HUF.

Can HUF be created?

  • HUF should only be formed by a Family
  • HUF is automatically created for a newly added member with family at the time of their marriage.
  • Newly born child is also become the part of HUF.
  • HUF can be created by Gift or by WILL or ancestral property.
  • Buddhist , Sikhs and Jain are able to create HUF.

In HUF, eldest male member is called Karta of HUF and he manages the properties of HUF. In HUF there should be minimum two persons are necessary, if there is ancestor property of the family. If any child take birth in this family he become the member of HUF. Up to 2005, in HUF family, there should be male child, but after the amendment under the Hindu Succession Act, in 2005 now female child is also considered as member of HUF.

As mentioned above by giving a gift to family having father, mother and son/daughter, one can create HUF. The amount of gift will considered as property of HUF. For this deed is necessary, where in name of the donor, as party of the first part  and name of all the members of done should be there as party of the second part. In this deed the property which is being gifted is to be mentioned. It may be movable or immovable. With this property HUF can earn income in separate status, may be interest income, business income if it started business with this property, from immovable property rent income is also generated. Separate return of income is to submitted.

In a family of Mr. A, he is a karta, his wife and son are the member of HUF. So if Mr. A has salary income, he will submit his return as Individual and from the property of HUF he earns Interest or Rent income, this is to be shown in the return of HUF. If some relative may give gift of Rs. 2,00,000 this will considered as income of HUF which is below Rs. 2,50,000 hence not liable to pay tax.

HUF may have the following types of Income:

  • Interest (Bank, Mutual Fund, Securities, Shares, any other mode of Investment)
  • If HUF is a partner in Firm, Interest and Remuneration from Firm
  • Rent Income
  • Capital Gain

HUF is a separate entity, so its income up to Rs.2,50,000 is exempt and above  Rs. 2,50,000 is liable tax as individual.

  • HUF can invest by way of LIC Premium and get Benefit u/s 80C up to Rs. 1,50,000 Please remember that HUF cannot open Public Provident Account benefit.
  • HUF can get benefit of section 80 D, 80DD and 80G
  • Under Capital Gain get benefit of Section 54


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  1. Prakash Kochar says:

    If HUF is partner in firm, the interest on capital will be assessed in hands of HUF, but remuneration received from firm will not be assessed in HUF’s Hand but will be assessed in hands of individual.
    Qua firm HUF is not partner but Karta represents HUF and remuneration is payable to working partner, HUF can not be working partner.

    1. Ajit C. shah says:

      As per Judgement of S.C. in the case of CIT Vs. Triloknath Mehrotra & Others 231ITR278 remuneration to karta is income of HUF

  2. Vijay says:

    If individual is gifting his own money to HUF, and HUF inturn earns interest on the same, won’t the clubbing provisions be applicable?

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July 2024