What is meant by Hindu undivided family business?
Hindu Undivided Family business is a precise kind of business structure found only in India. The source of membership in the company is birth in a family and 3 consecutive generations can be members of the company. The business is managed by the head of the family (eldest member) and he is called Karta.
What is the purpose of HUF?
Basically the logic behind forming an HUF to save tax is to avail the benefit of an extra PAN Card legally. As the Income of the Family is not taxed in the hands of any specific Individual, a new PAN Card is allotted to the HUF and Tax would be paid by the Family using this PAN Card.
What is HUF and its benefits?
By forming a Hindu Undivided Family, you can optimise your tax liabilities and also include your family members to benefit in the future. For the sake of income tax, the HUF is considered as a separate entity and is therefore taxed separately.
Is HUF a company?
The Joint Hindu Family Business or the Hindu Undivided Family (HUF) is a unique form of business organisation found only in India. Nowhere else in the world is this a legal form of business entity.
Who is eligible for HUF?
One person cannot form HUF, it can only be formed by a family. A HUF is automatically created at the time of marriage. HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters. Hindus, Buddhists, Jains and Sikhs can form HUFs.
Can husband and wife form HUF?
To create HUF, at least two coparceners are required either son or daughter. Therefore only husband and wife cannot create an HUF, unless the property has been received by a coparcener on partition or otherwise. However, there is no impediment to starting a new HUF by gift from family members.
What is difference between individual and HUF?
HUF has its own PAN and files a separate tax return. A separate joint Hindu family business is created since it has an entity separate from its members. Any returns from these investments are taxable in the hands of the HUF. A HUF is taxed at the same rates as an individual.
Who can create HUF?
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.
How do you earn income from HUF?
All income tax deductions are also available to HUF just like they are available to an Individual….Capital created by HUF through Income earned
- Through any Business.
- Investing in Shares and Mutual Funds,
- Investing in Real Estate.
- Investing in fixed deposits.
- Through Rental Income.
- Various other sources.
Is Reliance a joint Hindu family business?
There are several joint Hindu Family Business examples in India, which include Reliance Industries Limited and Mahindra and Mahindra Limited. The business is usually overseen by the eldest member of the family or the head, called the Karta.
What business can be done in HUF?
It can engage in business, investing in real estate and market linked investment options such as shares, earn income through rent etc. The HUF should file for ITR (Income Tax Returns) and income earned would be taxed as per the slabs.
Who can give money to HUF?
Hindus, Jains, Sikhs and Buddhists are allowed to create an HUF for tax benefits under wealth and income tax. The HUF includes all the family members who by birth, are eligible for an interest in the family property. The HUF is led by the oldest male member of the family, known as the Karta.
What does Hindu Undivided Family Business stand for?
However, all the members hold equal ownership over the property of an ancestor and they are called as co-parceners. It refers to a form of business organization which is owned and carried on jointly by the members of the Hindu Undivided Family (HUF). It is also known as Hindu Undivided Family Business.
What makes a Hindu Undivided Family or HUF?
Falling under the aegis of law, and controlled by a strict code of rules, a Hindu Undivided Family or HUF in short, does not distinguish between its members. To put it simply, the members of an HUF have no separate identity when it comes to taxes, profits and losses.
Who is the author of Hindu Undivided Family?
CA Abhishek Jain has conducted a meticulous study into the entire law relating to Hindu Undivided Families (HUF). He has not only explained the Hindu Law aspects of HUFs but also their income-tax implications, with practical examples. The author has also provided specimen deeds for formation of a HUF.
Which is an example of Joint Hindu family business in India?
To put it simply, the members of an HUF have no separate identity when it comes to taxes, profits and losses. There are several joint Hindu Family Business examples in India, which include Reliance Industries Limited and Mahindra and Mahindra Limited.