The only way an HUF can be dissolved is by a partition. If the income tax authorities feel that the HUF has been created to launder money, it may choose to take suitable action against it. Mint Money take In the past, India has had harsh income tax rates.
Sounds too good to be true right! Who are HUF Coparceners? Conclusion An HUF structure is a highly efficient and legal way for saving tax, especially when you are a high-income earner. All members of the family have a right in the assets of the Hindu Undivided Family including an unborn child in the womb of a mother.
An HUF is formed by a family.
As income and number of members grow, complications, too, increase. HUF does not arise from a contract. But to be recorded by tax authorities, it needs to have an income-generating asset, which can only come as a gift from a relative or through a Will for all members of the HUF.
The Karta can give his share in the co-parcenary property to his wife. It also comes in handy if a person decides to start a business in the name of an HUF, which has his children as members, then everyone has an equal claim on the business.
However, the family may mutually affect partition without going to the courts and mutual partition can be unequal. If A got the property from his father, while calculating his tax liability, both incomes will be clubbed and taxed in his hands. It requires legal documentation to make it full proof.
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.
HUF continues to be assessed as such till partition: An Hindu Undivided Family lets you save tax on your income which otherwise would have been taxed at a higher rate. The system is an extended family arrangement prevalent throughout the Indian subcontinent, particularly in India, consisting of many generations living in the same home, all bound by the common relationship.
Thu, May 28 This helps them to maximize the benefits available under the existing provisions of the Income Tax Act to plan and save tax on their income which otherwise may have been taxed at higher rates.
Sons and daughters and the father i. Thus, an HUF helps to reduce his overall tax liability substantially.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 group of people who do not constitute the family.
A Hindu undivided family or HUF is a legal term related to the Hindu Marriage Act. The female members are also given the right of share to the property in the HUF. The term finds reference in the provisions of the Income Tax Act, but the expression is not defined in the act.
There are various aspects of Hindu law relevant for the purpose. 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. 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 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. 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.Download