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HUF is not defined under the Income Tax Act but is covered under the Hindu law. By definition, HUF consists of all Individuals who are lineally descended from a common ancestors and also comprises of unmarried daughters.
- Minimum two members are required to form a HUF, constituting a joint family.
- A HUF is automatically formed when a person marries and start their family.
- The Hindu law though does not govern Buddhists, Jains and Sikhs, it can be treated as a HUF for taxation purpose.
- In HUF, the income generated belongs to the whole family, instead of a specific individual. Thus, then income is taxed in the name of HUF.
- One of the major benefits of the Hindu Undivided Family is that it is considered a separate legal entity.
- This entitles HUF to obtain a separate PAN card and bank accounts in the name of the HUF.
- Once a HUF is formed typically, the oldest member of the family becomes the ‘Karta’ and is provided with an additional exemption.
- The tax slabs are lower when compared to that of regular corporates.
- HUF is eligible for deductions under section 80 and other relevant exemptions.
- Allowed to take insurance policies for its members.
- Investments is allowed from HUF income and returns from such investments are taxable.
- Form Corpus: A capital asset can be used to form the HUF. It can be any ancestral property, asset received as a gift from relatives or through a will.
- Register a Deed: A deed is required on stamp paper declaring the formation of the HUF. It should include information of the Karta and the co-parceners. Once the declaration deed is made, the Karta can apply for a PAN card for the HUF as a separate legal entity.
- Opening Bank Account: Once the PAN is allocated, open a bank account in the name of the Hindu Undivided Family.
- Latest passport size photograph of the Karta/existing authorized signatories to the account.
- Identity proof of the Karta/existing authorized signatories to the account.
- Communication address proof of the Karta/existing authorized signatories to the account.
- Present phone/mobile number and e-mail id.
- PAN card (if not provided earlier).
- Hiring someone to help you with the registration process can turn out to be a great stress reliever. It can help you in making your business more professional, and give you a clear understanding of the process involved.
- We are here to help you with the entire process and make it easy and hassle-free.
- We have a team of experts, who have been a part of this industry for a long time, and know all the rules and regulations and the documents required documents.
- Our representatives are going to take up the registration process, so you can put your entire focus on the more important aspects of the business.
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