Assessment of Hindu Undivided Family. By Team Professional Times. What is an HUF. Hindu Undivided Family (HUF)or a Joint Hindu Family Consists of : Any married Hindu, Sikh, Jain or Buddhist man can form HUF
By Team Professional Times
All male members are minors & natural guardian is mother then she is the Karta.
If A and B Both Satisfied=
If any of A or B Not Satisfied =
Not Ordinarily Resident
Except for salary, HUF can earn from all of these sources.
As per section 64(2) a gift by a member of a Hindu Undivided Family after 31-12-1969 would attract Clubbing of Income in the hands of the member and as such the income from the converted property shall be deemed to arise to the individual & not to the family.
Total Saving= -1, 37,505 ((54,590+54,590)-2,46,685)
By setting up an HUF an individual can divide his taxable income between two separate income tax entities, this decreases his net taxable income as HUF gets 80C, 80CCF, 80D deduction separately and the basic exemption and cuts his annual tax payment by Rs. 1,37,505.
"Metes and Bounds”.
VineetkumarRaghavjibhaiBhalodia vs. ITO (ITAT Rajkot)
HUF is a “relative” for gifts exemption u/s 56(2)(v), (vi) & (vii)
The assessee received a gift of Rs.60 lakhs from his HUF. The AO & CIT(A) held that as HUF was not covered by the definition of “relative”, the gift was chargeable to tax u/s 56(2)(v). The alternate submission that gift was exempt u/s 10(2) was rejected on the basis that s. 10(2) applied only to amounts received “out of income of the estate” on partial or total partition of the HUF. On appeal by the assessee, HELD allowing the appeal:
In May 2005, the government passed a rule PREVENTING HUFs from opening newaccounts in the Public Provident Fund. All existing accounts, which had completed 15 years since the initial deposit, were also to be closed by 31 March 2011.
HUF CANNOT invest in other government securities such as the National Savings Certificates, as well. These restrictions should be done away with. Why should HUFs be treated differently from any other taxpayer?
If the Karta of the HUF is crucial for its smooth functioning, the HUF should be allowed to take a Keyman life insurancecover for him and should be made the nominee.
Hindu Succession Act accords equal rights to female co-parceners of an HUF, its only applicable to the Mitakshara school, it should be applicable to Dayabhaga school(West Bengal and Assam) as well.
Keraladoes not haveaHUFsystem. For the sake of uniformity, the same rules should apply across the country.
HUFs arenot eligible for some tax benefitsenjoyed by individual taxpayers. They should also be able to claim deduction for interest paid on education loans, benefits for pension fund contributions.