|
|
| *Ostroff, Fair and Company>>>India Taxes |
Question regarding H,].U.F.? |
I am retired and senior citizen..I want to creat H.U.F. I got two grandsons and two daughter in laws.My sons are tax paid can somebody tell me how i can creat HUF and how I can save tax through HUF. Hi, You cannot just create a HUF as if you like. One should have ancestral property. Then only they can create a HUF. In HUF all the members of the family will have the right and the head of the family (Male) will be the Karta of the HUF. If you are having the above said property (Any property like lands, house etc.), then you can create a HUF for that property. HUF is only for Hindus. (Not for Christians & Muslims.) The property earned by you will become your individual property now and cannot become HUF property and you cannot create a HUF for your property. Your property, after you, will become HUF property to your sons. At prasent the tax benifits for HUF and Individuals are same. (Rs.1 lakh exemption for each Individual and each HUF. For seniour citizans it is 1.85 lakhs & for Ladies it is Rs.1.35 lakhs). If you have HUF property and if it is taxable, then first obtain a Pan card for your HUF. Then file income tax returns. There is no other formality like registration or taking any licence. N.J.Reddy neswarareddy@yahoo.com Inherited property / cash or jewelery can be used to create HUF (by partitioning the inherited properties between yourself and with your married son), i think there is a supreme court judgment stating that HUF can be created by gift., please check out with your CA Yes you can save taxes, on account of being in a position to enjoy another basic exemption and a fresh opportunity to save more. I partially agrees with Mr. Reddy, First, I shall take up point by point discussion on Mr. Reddy鈥?answer and then shall try to reply to your query. ==============================... [reddy] You cannot just create a HUF as if you like. One should have ancestral property. Then only they can create a HUF. [my answer] That鈥檚 true that HUF can not be created as if you like but HUF is a creation of law (SC in Surjit Lal Chhabda case) and ANCESTRAL property has nothing to do with CREATION of HUF. I will take up property issue later. What is HUF? HUF stands for Hindu Undivided Family. So the 3 basic ingredients required by HUF is a)Hindu b)Undivided or 鈥淛oint鈥?br /> c)Family As per Guwahati High court in the case of Arjun Kumar Jhunjhunwalla & Sons(1997) a Single male member, after marriage can form HUF. Even in SC in Surjit Lal Chhabda case has ruled that Male member with wife and unmarried daughter can form HUF. Also in Madras High Court in the case of R. Subramania Iyer opined that 鈥溾€reation of Hindu Undivided Family is a God Gifted phenomenon. As soon as a married Hindu gets a Child, a new HUF, undisputadely comes into existence. Coming to property, Since the HUF contain the term 鈥淯ndivided鈥?which also refers to 鈥淛OINT鈥? therefore 鈥淛OINT property鈥?is one of the essence notion of a joint family. And JOINT Property consists of either of the following: a)Ancestral property, IF ANY. This is not an absolute requirement. b)Accretions/additions to ancestral property. c)Acquisitions with joint fund. d)Self acquired property of a member thrown by him into the common stock, when acquirer allows such property to be treated as HUF property [SC in Sher Singh V. Gamdoor Singh (1997)]. ==============================... [reddy] In HUF all the members of the family will have the right and the head of the family (Male) will be the Karta of the HUF. [my answer] Partially Correct. One of the important concept in case of HUF is 鈥淐oparcenary鈥? Coparcenary is a narrower body than the HUF. It includes only those persons who acquire by birth an interest in the Joint or Coparcenary property. Till the Hindu Succession (Amendment) Act, 2005 (39 of 2005) had come into force from 9th September, 2005, 鈥淐oparcenary鈥?used to include only 鈥淢ale鈥?members of HUF. But not any more. The Hindu Succession (Amendment) Act, 2005 (which has been enacted to remove gender discriminatory provisions in the Hindu Succession Act, 1956 ) gives the following rights to daughters under Section 6: a)The daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son; b)The daughter has the same rights in the coparcenary property as she would have had if she had been a son; c)The daughter shall be subject to the same liability in the said coparcenary property as that of a son; and any reference to a Hindu Mitakshara coparceners shall be deemed to include a reference to a daughter of a coparcener; d)The daughter is allotted the same share as is allotted to a son; e)The share of the pre-deceased son or a pre-deceased daughter shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter; f)The share of the pre-deceased child of a pre-deceased son or of a pre-deceased daughter shall be allotted to the child of such pre-deceased child of the pre-deceased son or a pre-deceased daughter. The condition for being a Karta is that only ELDEST FAMILY MEMBER can be a Karta. Nowhere it is written that only male has the right. Now after the above amendment, position is amply clear. ==============================... [reddy] If you are having the above said property (Any property like lands, house etc.), then you can create a HUF for that property. HUF is only for Hindus. (Not for Christians & Muslims.) [my answer] Fully agree. Let me add to this. Jains, Sikhs are also treated at par with 鈥淗indus鈥?since these communities are offsprings of Hindus. ==============================... [reddy]鈥淭he property earned by you will become your individual property now and cannot become HUF property and you cannot create a HUF for your property. [my answer] Partially correct. Though property earned by one is his Individual property but one can easily convert that individual property into JOINT property or HUF property. Please see my reply above referring the case of SC in Sher Singh V. Gamdoor Singh (1997). ==============================... [reddy] Your property, after you, will become HUF property to your sons [my answer] Totally incorrect. Please refer to very recent case of Dr.H.N.Mehrotra Vs. C.I.T (2005) 276 ITR 158 of Allahabad high court. Held by the Hon'ble court that, as per section 8 of the Hindu Succession Act, the property of the father inherited by his son, is assessed in his individual capacity and not as karta of the HUF. Hence, income from such property belonged to the assessee. ==============================... [reddy] At prasent the tax benifits for HUF and Individuals are same. (Rs.1 lakh exemption for each Individual and each HUF. For seniour citizans it is 1.85 lakhs & for Ladies it is Rs.1.35 lakhs). [my answer] Correct. ==============================... [reddy] If you have HUF property and if it is taxable, then first obtain a Pan card for your HUF. Then file income tax returns. There is no other formality like registration or taking any licence. [my answer] Correct. <<<<<<<<<<<<<<<<<<<<<<<<<< >>>>>>>>>>>>>>>>>>>>> NOW COMING TO YOUR QUERY. a.As I said above, your HUF is already created. Even your two sons have HUF on there own, which means already 3 HUF鈥檚 exist in your entire family. One yours and two of your sons. I will rather use the term TAXABLE HUF and yes it can be created. b.There can not be any sure shot answer as to how one can save tax through HUF. It all depends on one鈥檚 fact and circumstances. Answer to such question is beyond the scope of this forum. I will suggest you contact some Chartered Accountant or Tax practitioner for detailed guidance. But yes tax planning is possible through HUF route. In law HUF is treated at par at with Individuals and as such as you can have 3 lakhs of additional tax free income in your Family. Deepak Bholusaria Chartered Accountant Chaturvedi & Pitthisaria's Income Tax law, Sixth Edition Taxmann's Income Tax Guide |
| Tags |
| United Kingdom Taxes Spain Taxes Singapore Taxes Mexico Taxes Ireland Taxes India Taxes Germany Taxes Canada Taxes Australia Taxes Small Business |
Finance Categories--Copyright/IP Policy--Contact Webmaster |