OUR BOOKS

16 personal finance principles every investor should know how to be your own financial planner in 10 steps 11 principles to achieve financial freedom

Hindu Undivided Family – Save more tax by creating a HUF in India

by Manish Chauhan · 286 comments

Do you know how you can use Hindu Undivided Family (HUF) to reduce your overall tax liability? In this article I will give you tips and real life examples on how you can use HUF to save taxes legally. Before that let’s understand what HUF is.

HUF Hindu Undivided Family

The concept of HUF says that apart from individuals there is another separate entity called “Family” which can also have its own assets and liabilities and even regular source of income, which should be taxed separately. For example, if an ancestral residential property is rented out, then the rent arising would be considered as Family’s income and not as income of individual. In real life this rent is shown as income of one individual and he pays the tax on it, however a HUF can be formed and the rent can be shown as the whole family income (HUF) and it can be taxed separately.

Until a few years, many Indians used to keep multiple PAN cards and used to show Income under different PAN cards and used these tricks to avail the benefit of slab rates by showing themselves as different persons. This however is illegal by law and is a punishable offence as one person cannot have more than 1 PAN Card. But, one legal way of obtaining an extra PAN Card is to form an HUF. As the Income of an HUF is taxable in the hands of HUF and not in the hands of any Individuals, a separate PAN Card is issued for an HUF and the benefit of slab rates can be availed on this PAN Card.

Formation of HUF

A false impression amongst people is that HUF needs to be created whereas the truth is that an HUF comes automatically into existence at the time of marriage of an Individual and no formal action needs to be taken for the same. However, in case a person who wants to specifically register for creating an HUF, he can furnish a creation deed on a stamp paper (The Format of Creation Deed can be downloaded from here) .As HUF is governed by the Hindu Law and not by the Income Tax Act, individuals belonging to other religions are not allowed to form HUF except Jain’s and Sikhs who can create HUF even though they are not governed by the Hindu Law. Two entities are extremely important for you to know in HUF are the coparceners and members.

Coparcener is someone who has the right to demand the share of the property of family; coparceners are generally the Karta (Main decision maker of family, usually the Father , but Manmohan Singh had 5 years ago brought an amendement which stated that Females can become Karta & there can be an all female HUF as well), then sons & daughters, grandsons and great grandsons in order of their first right. Wife of the Karta is not a coparcener or even spouse are not coparceners and hence can’t demand/ ask for any share in HUF, they are just merely members of HUF.

Example of Tax Saving by forming an HUF

As discussed above, the main advantage of an HUF derives from the fact that an extra PAN Card is issued for the HUF. We’ll explain this benefit with the help of following example.

Lets say there are 4 members in a family

  • Husband – Salary 9 lacs
  • Wife – Salary 7 Lacs
  • 2 Children without Salary
  • Additionally, one  ancestral property which fetches them an annual rent of 6 Lacs p.a

Now the Question is – In whose hands should this Rental Income of Rs. 6 Lakhs p.a. be taxed? In real life, the most sought after solution is to show the rent as income of wife or anyone who has no income or less income so that the tax liability is least. But is it the best solution? Let’s see 3 different cases here in which this additional rental income can be shown and how tax can be saved!

Option 1 – If this Rental Income is shown in the hands of the Husband.

Hindu Undivided Family HUF tax advantage

Option 2 – If this Rental Income is shown in the hands of the Wife

Hindu Undivided Family HUF tax advantage
As this Income is arising to the family as a whole, the Govt has also extended this option of taxing this Income in the hands of the whole Family. Although very few people in India know this fact family income can also be taxed in the hands of the whole family by forming an HUF.

Option 3 – If this Rental Income is shown in the hands of the HUF

Hindu Undivided Family HUF tax saving

The above 3 options clearly indicate that Option 3 is the best option as the least tax would be payable by the family if the Rental Income is taxed in the hands of the HUF. The tax saved by showing this income in the hands of the HUF is Rs. 1,18,000 (i.e. difference between “tax paid if rental income is taxed in the hands of HUF” and the “tax paid if shown in the hands of the wife which is the 2nd best alternative”)

Please Note: For the sake of simplicity, Taxes have been computed without taking into account the “Deductions available under Section 80C” and “Education Cess applicable on the Tax Payable”

Procedure to create HUF

These are the steps to create capital of a HUF.

  • First one should open a bank account with the name of Hindu undivided family like “AJAY HUF” with a stamp, ID Proof and the proof of the members of the family of HUF.
  • Important :- While opening a Bank Account in the name of HUF – Banks always ask for a rectangular stamp which states the name of the HUF and also the Karta who is signing it. A round stamp is not accepted as per RBI Circular. The same applies at the time of opening of bank account of Sole Proprieter as well.
  • Next is to apply for PAN (Permanent Account Number) of the income tax.
  • Now transfer money by gifts etc to HUF capital keeping in view the clubbing provisions and tax on gifts under Income tax act, Remember there is no Tax on gifts in kind though they may attract clubbing provisions in some cases.

3 real life tricks of saving taxes through HUF

1. Saving tax by getting gifts

One way of saving tax is by transferring the money received from strangers or family are taken as gifts in name of HUF. So if Ajay starts his HUF called “Ajay HUF” and he is getting some gifts from his father, friends or anyone else, he can ask them to give it to “Ajay HUF” and not Ajay itself. That way the gift will be treated as income/asset of HUF and taxed separately. One important point here, if some stranger is giving gift to HUF, there is a limit of Rs 50,000 on which no tax has to be paid, but actually it can go up to Rs 1.8 lacs as the taxable limit is that much, and if one also has to do investments of 1.2 lacs (total 80c limit), then one can afford to receive up to Rs 3 lacs of gifts in a financial year and there will be no tax liability at all.

2. Assign ancestral properties and wealth to HUF and invest it

If family is going to receive an ancestral property or any wealth, then it’s better to transfer it on HUF name so that whatever earnings happen in future in form of rental income or capital appreciation of assets becomes income of HUF itself and taxed in its own hands. That way the total tax liability of family can be minimized.

3. Use HUF income for expenses and Insurance for Family

As HUF enjoys separate tax benefit under sec 80C, one can use the income of HUF for buying Life & health insurance for family and the permissible deductions can be availed for tax purpose in hands of HUF, so if the total premiums for insurance requirement of family is Rs 50,000 per year, then It can go from HUF income and also the individual can exhaust his 1 lac limit separately via PPF, ELSS and other tax instruments. Also family day to day expenses can be used from HUF income and hence it will leave other members with more disposable income which one can use to service higher EMI’s if required.

Some important Points you should know about HUF

  • For creating the HUF one need to get married, there is no need to have child or children for creating the HUF.
  • An HUF can recieve any amount in gift from bigger HUF’s (HUF of Father, HUF of Grandfather) or any gifts received by the members of HUF (birthday, marriage, etc.) can be treated as assets of HUF , but stranger can gift HUF, not more than 50000 rupees.
  • Daughter also continues to be a Coparcener after her marriage of that family whether she also will be a member of HUF of her husband. So that way daughters can be co-parancers in two HUF’s :)
  • HUF can pay remuneration to the KARTA of family for the interest and expenditure to run the family business.

Be cautious with HUF creation

While all the above points excites people on opening a HUF account immediately and start taking tax benefit, there are some caveats and one has to be little careful. Remember that HUF is a separate entity and represents the whole Family. So once some assets is assigned to HUF, then it becomes part of HUF only and one can be suddenly take money from HUF for personal purpose . If other co-parceners of HUF demand the partition of HUF only then one can get his/her share of the HUF. Otherwise it will not break. Also for taxation point, a lot of people mislead the tax department buy using fake HUF transactions and therefore, HUF is looked with high degree of scepticism.

If the HUF is not formed properly and if the assets are income are fudged for evading tax, it can get you in trouble, therefore it’s highly advisable to hire a good CA and create your HUF in the best possible manner with right advice. There is no harm in paying 10,000-12,000 to a CA if HUF can give you 5-10 times tax savings. It would be a great investment, not an expense!

HUF property cant be mentioned in the WILL

Though HUF is very useful tool but one has to use it very judiciously and thoughtfully. Don’t look for tax benefits only , but practical problems also. Be aware that you cannot make a will out of HUF property. Once transferred to HUF, the assets /property becomes of HUF and you no longer have any individual right on it. To explain with example -

“A”, who has 2 daughters and a son.He long back ago purchased a house in the name of HUF and put that house on rent, so that the Rental income comes to HUF and will not be be added in his or his spouses’s income . But now , he ‘s retired and wants that this property should be transferred to his son after his demise. But this is not possible as that property belongs to HUF. He can’t even write a WILL for HUF property and with the huge rise in Real estate prices, none of daughter is ready to leave her share in it.

Thanks to Manikaran Singhal to add this point

Who should actually go for HUF

HUF will be extremely efficient for those people who have a higher income and high saving rate and some form of ancestral assets which can be marked as “Family Assets”. Evaluate if HUF can really give you that kind of tax advantage or not for people who do not have high salary or who do not have a big enough family. So make sure you can get the maximum out of the HUF and understand the limitations of opening HUF before you go for it.

This article has been authored by CA Karan Batra who blogs on charteredclub.com (Content added by Jagoinvestor with inputs from Karan)

Can you share how was the article and did it help you in understanding Hindu undivided Family ? Are you going to open a HUF account ?



Subscribe via RSS or Email:
What do you want to read about
Mutual Funds Life Insurance BankingHealth Insurance Credit Report and ScoreMost Commented ArticleReal Life Experiences Share MarketLoans Real Estate Income TaxCredit Cards For Begineer Investors Succession Laws EPF ULIP Product ReviewsBest of Jagoinvestor Other Products & Concepts How-TO GuidesBooks, Launches, Initiatives Investors Myths Psychology & Wisdom PPF General  
Buy Jagoinvestor Books in Ebook Format

{ 285 comments… read them below or add one }

1 Vishnu October 3, 2011 at 12:49 pm

Wonderful… Hidden Secrets.. (Not cheap tricks)

+1

Reply

2 Manish Chauhan October 4, 2011 at 7:22 pm

Vishnu

Please share it with more people !

Manish

Reply

3 Nilay October 3, 2011 at 4:41 pm

HI Manish,Good suggestion.
However wanted to check with you. Can i loan some amount to my spouse and she invests the same (and includes the income in her tax return and pays taxes on it)and she pays me nominal interest say 3.5% p.a. I pay taxes on the nominal interest part.
Will this attract clubbing provisions / shall i be liable for any taxes ?

Reply

4 CA Karan Batra October 4, 2011 at 4:26 pm

There are many complications involved if you are giving this as a Loan. It would be better that rather than giving it to her as a Loan, gift this amount to her.

And in case you want the money back, tell her to gift it back to you.

This is a better option if you intent to make investments on your wife’s name

Reply

5 Abhishek August 26, 2012 at 11:11 am

Hi,
Just to save taxes does it work in following way
(1) I gift 5 lac to my wife (5 lac is just an random amount)
(2) My wife Invest or Put in FD of her name
(3) Assuming my wife doesn’t have any other income, She files IT returns and TDS deducted gets refunded
(4) If I need 5 lac back, She gifts me back ?

Are you suggesting that it would work, and We (I & my wife) ended up paying no tax on interest/return on investment ?
If yes, Then how do we gift money? Some documentation has to be done?
And Above holds true even if you don’t had HUF formed (or registered)

Reply

6 Manish Chauhan August 26, 2012 at 11:36 am

No it does not work that way for spouse and minor child, you can do this with major child or parents only

Reply

7 BHARAT SHAH October 3, 2011 at 4:46 pm

yes, it is really informative . of course am not opening as not required as per the criteria you stated.

Reply

8 Manish Chauhan October 4, 2011 at 7:22 pm

Bharat

Good .. please consult a CA before that !

Manish

Reply

9 Sid October 3, 2011 at 4:50 pm

Very informative article… Lot of hard work put in… Thanks…

Reply

10 Manish Chauhan October 4, 2011 at 7:21 pm

Sid

thanks for appreciation

Manish

Reply

11 Eswar October 4, 2011 at 9:57 am

Hi Manish.

Excellent information. You always gives the best info for all of us. Nice article and I am sure 95% of the people who pays tax may not know these secrets.

Great job.

Reply

12 Manish Chauhan October 4, 2011 at 10:23 am

Eswar

thanks :) . A lot of people just hear about HUF but never try to learn how it can be useful for them !

Manish

Reply

13 Marshal October 4, 2011 at 1:16 pm

good too know, but hard to implement..:). will give a try.
one question can you open demat account or MF folio by the name of HUF?

Reply

14 CA Karan Batra October 4, 2011 at 4:28 pm

Yes, Demat Account can be opened in the name of HUF and the name of the Karta would also appear in the Account Name.

however, the income would be taxable in the hands of the HUF and you would be able to avail benefits of having that extra PAN Card

Reply

15 Chirag Shah November 7, 2011 at 7:39 pm

I liked your article very much.

But as per point nos. 1.2.6 and 4.3 of the SEBI’s master circular CIR/MRD/DP/ 41 /2010 dated December 31, 2010 – HUF demat accounts can be
opened in the name of Existing Karta but not in the name of Deceased Karta and HUF entity. The demat account shall be in the name of natural persons, PAN card details of the HUF would be captured in the system.

Therefore, demat account cannot be opened in the name of HUF.

Reply

16 Manikaran Singal October 4, 2011 at 1:26 pm

Hi Manish!!

Just want to share/add one useful information regarding your article: that though HUF is very useful tool but one has to use it very Judiciously and thoughtfully. don’t look for tax benefits only , but practical problems also. Be aware that you cannot make a will out of HUF property. Once transferred to HUF, the assets /property becomes of HUF and you no longer have any individual right on it. To explain with example:
“A”, who has 2 daughters and a son.He long back ago purchased a house in the name of HUF and put that house on rent, so that the Rental income comes to HUF and will not be be added in his or his spouses’s income . But now , he ‘s retired and wants that this property should be transferred to his son after his demise. But this is not possible as that property belongs to HUF. He can’t even write a WILL for HUF property and with the huge rise in Real estate prices, none of daughter is ready to leave her share in it.
Above is a real life example…but Yes if used properly then this Entity can help you in many ways especially in saving taxes. :)

Reply

17 Gautam Satpathy October 4, 2011 at 2:19 pm

The daughters would continue to be members of their father’s HUF after they get married. Of course the question of cordial relations between the existing and new family arises and must be dealt with. However technically the daughters can continue to enjoy the benefits of their father’s HUF. Or am I making a fundamental mistake here?

Reply

18 Manikaran Singal October 4, 2011 at 3:10 pm

Gautam, you are very much correct ..that even after marriage daughters will remain part of father’s HUF. But the issue is how would a father give away the property which is a part of HUF to his Son only. All have equal rights on it.

The time when he formed this HUF and transferred the property, he was not aware of this sort of practical pproblem.

Reply

19 CA Karan Batra October 4, 2011 at 4:34 pm

Yes, this is one problem associated with HUF as now the Assets belong to the whole family and not to a specific individual.

Reply

20 Amit October 4, 2011 at 5:31 pm

Can the advantage of HUF be also taken if you form a company instead of HUF. Probably in a company, there would not be ineritance issue as every one would have some definite share in the cpompany which could be bought out or transfered/ willed.

Reply

21 Manish Chauhan October 4, 2011 at 7:09 pm

Amit

HUF creation and Company are totally different stuff .. You cant do things in company which you could in HUF

Manish

Reply

22 CA Karan Batra October 5, 2011 at 12:15 am

@ Amit

You wont get any benefit by forming a company

The main benefit of forming a HUF is to avail the benefit of lower slab rates which wont be available as Companies are taxes at a flat rate of 30%. The benefit of slab rates is not available to a company.

Moreover, the cost of forming a company is very high and a whole lot of compliance issues arise in a company.

Reply

23 Manish Chauhan October 4, 2011 at 7:12 pm

Manikaran

Extremelly good point. I will add it to the article . Thanks for sharing .. i can see that its a very relevant point

Manish

Reply

24 Shishir Saxena July 17, 2012 at 6:56 pm

After amendment (through Budget 2012) in gift provision to/from HUF, I think HUF can gift that house to member of HUF (being relative), thus it is not a problem any more!

Reply

25 Nayandeep Saha October 4, 2011 at 2:08 pm

Too good of an article. I use to show paying rent to my mother. So that will give less tax liability if my mother gets a HUF PAN card.

Reply

26 Manish Chauhan October 4, 2011 at 7:08 pm

Nayandeep

Meet a CA first .. dont create HUF without CA suggestions .

Manish

Reply

27 Gautam Satpathy October 4, 2011 at 2:16 pm

Good Article Manish. You could have touched upon a few more points though. Or perhaps you can do so in a follow up article. Maybe with a few more examples with computations.

A few points:

1. What about property jointly held by husband and wife? Say a flat that was purchased by them jointly. Can such be transferred to the HUF? What would be the implications if such is possible? Can EMI payments be shown as coming from the HUF? What about property registration? What about purchase of a new property?

2. Income of the HUF – if the HUF by itself has no income, can the Karta and other members contribute a portion of their income to the HUF and show that as HUF income? As a gift perhaps? Or an interest free loan to the HUF? Implications if such is possible?

3. HUF investments – can the HUF invest in say mutual fund and stocks? I assume yes since it is an independent entity with it’s own taxation. Tax implications?

4. What happens when the current Karta dies? Let us say the husband is the karta and he expires. What is the process by which either the surviving wife or eldest child (perhaps) is made the new karta.

It would be great if you could combine these are additional points raised by other readers and create 2 – 3 hypothetical case studies and elaborate on them, with detailed computations etc. That would help us understand this concept much better and empower us to better discuss with a CA.

Regards,

Gautam

Reply

28 Manish Chauhan October 4, 2011 at 7:07 pm

Gautam

1. No , you cant assign some property which was bought by husband and wife .. it has to be FAMILY PROPERTY Which was inherited ..

2. No you cant contribute income to HUF ..

3. Yes , it can .. the income will be HUF income and they can avail tax deductions in the same way

4. Karta death will not impact the HUF , it will still be there … any co-parancer can ask for the partitiion if they want

I think this much info is good enough to understand HUF .. CA should be contacted if you need to go for HUF

manish

Reply

29 Giridhar October 4, 2011 at 3:16 pm

Thanks for the nice article Manish. Generally what I understand is if you have an ancestral house then only HUF will save you some tax. Would there be any benefit for a couple who have considerable savings and income on their only. If there is a chance I can contact a CA for further details.
Regards,Giridhar

Reply

30 CA Karan Batra October 4, 2011 at 4:37 pm

Yes Giridhar, you are right – it is mainly beneficial to those having ancestral property.

Reply

31 Kshitij October 4, 2011 at 6:55 pm

What if I am not a Hindu?

Reply

32 Manish Chauhan October 4, 2011 at 7:02 pm

Kshitij

HUF is only for Hindu / Sikh and Jains .. as its defined in Hindu Law , not tax laws

Reply

33 V R Kumar October 4, 2011 at 7:58 pm

My only confusion is which wife to choose ?? — Just kidding.

Manish, your blog is “M I N D – B L O G I N G”

Reply

34 Manish Chauhan October 4, 2011 at 9:08 pm

VR Kumar

THanks :) .. please share it with others as well

Mnaish

Reply

35 Reema October 5, 2011 at 1:08 am

Thanks for the information!

Reply

36 Dev October 5, 2011 at 1:24 am

Hi Manish,
Nice and informative article. I have a question regarding the reverse HUFication. What I want to ask is that what is the procedure of transferring the properties back to individual member’s name and what are its implications?

Reply

37 Manish Chauhan October 6, 2011 at 7:31 pm

Dev

This cant be done .. a HUF has to be broken by co-parancers .. it can happen only if one of the co-parancers ask for break

Manish

Reply

38 Srinivas October 5, 2011 at 12:58 pm

Good article as usual. And long awaited one. Concept of HUF explained in lucid fashion. Beautiful illustration(photo) which is a regular feature.

I created a HUF a year back. In some banks, they donot open an account without a PAN card though it is not a legal requirement(My experience in SBI/ICICI). So one can apply for a PAN for the HUF first and then go for a HUF account.

One general principle is one can manage tax efficiently if he has more than one PAN cards. However, to make it legal, one can take the help of HUF, Major children and older parents(if their income is lower than tax limits). I tell that an adult child can be an earning member of a family eventhough he/she doesnot have a job, rather the age of 18-23 of a child can be utilised for taxplanning of the parent.

HUF can also be used for an efficient way of tax saving for the future. A family can get gifts and strengthen their HUF. As indicated, HUF can pay many expenses like insurance etc.

For me this can be apart of overall financial planning for a married couple. Let me explain.

Soon after marriage a couple can create a HUF. They can strengthen the same by routing gifts to the family to HUF. Once the taxable limit is reached, it can go for savings like PPF/insurance etc. Once that limit is crossed, one can go for demat account for HUF and invest in various instruments.

Meanwhile they will have a child(most likely, of course). Once he/she attains age 18, part of the money can be gifted so that his/her tax limit is fulfilled. Will give some leeway in the HUF to strengthen it further. Same can be done for the second child!!!!!!!. Once the child is married, he/she can form a new HUF and the whole process can be repeated. Over and above, the existing HUF can gift to newly formed HUF. This cycle can go on endlessly.

What is the catch. It requires that the family remains united. If a coparcener seperates for any reason and wants his share, issue arises.

Reply

39 Manish Chauhan October 6, 2011 at 7:24 pm

Srinivas

Good and logical points from you . What are the documents required for applying a PAN card for HUF ?

Manish

Reply

40 Srinivas October 7, 2011 at 7:36 am

Same as that for normal PAN. Address proof and identity proof. Can be applied online and takes about a month.

Reply

41 Manish Chauhan October 8, 2011 at 12:27 pm

Srinivas

So banks dont ask for members info or how many people are their in family ? they just issue the PAN ?

Maniash

Reply

42 Srinivas October 9, 2011 at 3:31 pm

Actually this detail(about coparceners) is required by the bank. However, in ICICI bank where i finally opened a HUF account, they were satisfied with my details and HUF PAN card(Of course, i am an account holder already, which did help). Not sure what other banks do.

Actually there are many practices by respective banks which are not required legally. Many customers, to prevent a showdown (or due to lack of knowledge) accept and toe the line of the bank.

Reply

43 Manish Chauhan October 10, 2011 at 11:23 am

Srinivas

Thanks for the info :)

Manish

Reply

44 Ankur Lakhia October 5, 2011 at 5:01 pm

Karan,

Very informative article. I still have few queries:

1. It is mentioned that wife of Karta can not be Coparcener. So, if I am Karta and I die, what are rights of my wife on HUF assets just as a member?
2. What difference it makes if one is Coparcener or a member, in terms of claims on HUF assets and income?
3. Can my son / daughter as Coparcener can withdraw assets / money from HUF at thier whims & fancies or Karta is the only one deciding authority.

It will be very useful if you clarify above points.

Reply

45 Manish Chauhan October 6, 2011 at 7:21 pm

Ankur

1. In that case , your wife will become a KARTA , but only if she is alone or she has a minor child , if any major son is there , then they become Karta

2. A coparancer has the right for asking for share in HUF , member cant ask for share ..

3. Yes :) .. thats one big reason why one has to be careful while making HUF

Manish

Reply

46 Ankur Lakhia October 7, 2011 at 1:21 pm

Manish,

Thanks for response. Since my wife can not become Karta on my death with adult children and adult children can take out HUF assets any which way they like, this entire concept of HUF looks to me quite a problematic one. It may be useful in some instances. However, a person needs to be very careful in creating HUF. Consequences go beyond just tax savings.

Thank you very much to you guys for educating me on HUF. I was not aware of these details.

Reply

47 Manish Chauhan October 8, 2011 at 12:19 pm

Ankur

Yes .. HUF is tricky and not something which can be made by anyone just for the sake of saving tax

Manish

Reply

48 Srinivas October 7, 2011 at 9:41 am

By definition, HUF is for joint family property.

However, Karta can utilise it as general tax saving instrument. It is not necessary that the existence of HUF need be known to all the family members.

I think HUF can be created by Karta and the fund flow in and out can be managed by him. These details are not known to the family members and mostly they may not care. Hence if HUF is strengthened with cash and not with immovable inheritances, the issue/(fear????) of coparcenors (knowing and) calling for a split can be minimised.

True that one has to pass on the financial inputs to the family to make them financially educated. However one can have cards up in his sleeve, right?

Reply

49 Manish Chauhan October 8, 2011 at 12:27 pm

Srinivas

Thats a very good point :)

Manish

Reply

50 Sachin October 7, 2011 at 1:28 pm

You made it clear that only Hindus/Sikhs/Jains benefit from this provision – it seems unfair? Or is there some other rule that gives similar tax benefits to Christians?

Reply

51 Manish Chauhan October 8, 2011 at 12:16 pm

Sachin

There is nothing like fair or unfair . HUF is defined in Hindu Act adn not Income tax act .

Manish

Reply

52 Sandip October 10, 2011 at 5:20 pm

I really enjoyed the article. I fully agree with the author. Looking forward to more such articles!

Reply

53 No Vacancy October 11, 2011 at 9:59 am

To me it is looking like a CHAKRAVYUV… easy to get in … difficult to get out.
Many thanks to jagoinvestor for this article. As suggested by someone, a few hypothetical cases can be created, elaborated and discussed.

Reply

54 Manish Chauhan October 14, 2011 at 11:46 am

No Vacancy

Yes , its true .. thats why not all will be able to and inclined to go for HUF

Reply

55 Mukesh October 13, 2011 at 2:43 pm

I am under 30% tax slab. i generally invest in shares and have some interest income. this income is added to my salary income and is taxed at 30%.
my wife is a housewife and have very less income from shares. she doesn’t have much capital in her file. i would like to give some money from my file to my wife and she can go for FD.
can you please let me know if i can simply give 4-5 lac Rs to my wife or is there any restriction?
if not, what are the options to make her income tax file big.

Reply

56 Manish Chauhan October 14, 2011 at 11:08 am

Mukesh

You cant do that , even gifting will not help , read clubbing provisions : http://www.jagoinvestor.com/2009/09/what-are-income-clubbing-provisions-and.html

Reply

57 abhishek October 24, 2011 at 4:45 pm

Hi Manish,

A HUF cannot open a new PPF a/c now . This rule was passed a couple of years back. The running HUF PPF a/cs will not be renewed further.This is big disadvantage for HUF now!

Reply

58 Manish Chauhan October 25, 2011 at 7:07 pm

Abhishek

Ohh ok .. didnt knew that .. thanks for that information :)

Manish

Reply

59 Roland Thomas De Cruz November 2, 2011 at 2:01 pm

Thanks for sharing this with us…
Although I’m a Christian I’m not eligible to have an HUF account. But since a lot of Christians too have got Hindu names (like Sachin, Pravin ect), can I open an account with a name like “Sachin HUF”?

Reply

60 Rakwsh Agrawal November 2, 2011 at 2:28 pm

Dear Manish,
My father had created an HUF with me. When he expired, PNB did not agree to accept me as Karta. They made my mother (very old) as Karta and I became the manager to handle the affairs. (refer to Your comments on 6th Oct).

Please advise as to how to close old HUF, since I have also created an HUF with my family and also can I transfer all or some money from Fathers HUF being manager.
Thx
Rakesh

Reply

61 Manish Chauhan November 5, 2011 at 1:20 pm

Rakesh

Are you are not the KARTA , but only a co-parancer, you can only ask for division of the HUF and then it will be closed and you will get your own share either directly or transferred to HUF

Manish

Reply

62 sunil agrawal November 16, 2011 at 5:28 pm

If my HUF were to receive a gift of Rs. 1,00,000/- from my father in law.
is this amount taxable.

Reply

63 sunil agrawal November 16, 2011 at 8:08 pm

i wanted to know if my father in law gift my HUF Rs. 1,00,000/- is it taxable?

Reply

64 Manish Chauhan November 17, 2011 at 11:16 am

Sunil

I am not sure on this , better ask on forum : http://www.jagoinvestor.com/forum/

Reply

65 Karan Batra January 22, 2012 at 8:55 pm

Not taxable …. Any amount of gift received from family members is exempt…

Reply

66 sunil agrawal November 18, 2011 at 10:08 am

dear Manish,

I was told any amount more than Rs. 50,000/- it is taxable .

thanks any way.

Reply

67 Manish Chauhan November 18, 2011 at 10:33 am

Sunil

Yea .. but I am not sure if that limit applies between father in law and son in law, still confirm it on forum ,you will get the answer for sure !

Manish

Reply

68 Karan Batra January 22, 2012 at 8:53 pm

Yes, amount more than Rs. 50,000 is possible

but there are certain exceptions if gifts are received from family members…

Reply

69 Shishir Saxena July 17, 2012 at 7:05 pm

but father-in-law is not a reletive to HUF ??

Reply

70 Rajeev Agrawal December 6, 2012 at 12:07 am

can one man can creat more than huf

Reply

71 Manish Chauhan December 11, 2012 at 3:50 pm

Yes , there is a possibility

Reply

72 swati January 3, 2014 at 2:03 pm

Plz tell me how is it possible that an Individual may have more than one HUF

Reply

73 Manish Chauhan January 4, 2014 at 11:00 am

Imagine a women who is married. She will be part of HUF of husband and her father both !

Reply

74 Srinivas November 25, 2011 at 5:17 pm

Would like to know if one can take loan for home loan principal prepayment and pay it back to HUF with interest. If so, can he show the interest as deductible from taxable income similar to a bank loan.

Reply

75 Manish Chauhan November 29, 2011 at 4:49 pm

Srinivas , yes that can be done ..

For more discussion on this , I would suggest opening a thread on our forum : http://www.jagoinvestor.com/forum

Reply

76 Karan Batra January 22, 2012 at 8:52 pm

Yes, Srinivas… it is legally possible to do so but practically very difficult and not advisable…..

taking a loan is possible but showing the computation of interest is not easy as many Indians tend to avoid paying taxes by doing this..

Reply

77 Ganesh December 26, 2011 at 11:00 pm

Hi Manish,

My wife and I are working and both are paying tax.

I also do a part time job for which I get form 16-A with deduction of tds at 10%.

1) Can I start a HUF and ask my part time employer to make the cheque in the name of HUF.

2) Few years down the line, when we want to purchase a house, can we break the HUF and use the money accumulated in the HUF for purchase. (Is a partition of HUF between Husband & Wife allowed ?).

rgds,
Ganesh

Reply

78 Manish Chauhan December 27, 2011 at 11:16 am

Ganesh

1. NO you cant do that

2. You can not break the HUF like that .. you can only make investments through HUF

Manish

Reply

79 Karan Batra January 22, 2012 at 8:49 pm

Manish -why do you want to break the HUF…. you can make investments on the name of HUF itself…

btw HUF can be partioned but there are many formalities that need to be done…

Reply

80 Ravi December 30, 2011 at 5:45 pm

Can a HUF PAN be obtained even after years of marraige have passed? If yes, then what will be the Date of formation?

Reply

81 Karan Batra January 22, 2012 at 8:47 pm

Ravi – Yes you can apply for creation of HUF even anytime after marriage

Reply

82 naren January 10, 2012 at 2:34 pm

I became the karta in my fathers HUF after his death. can I open a new HUF in my name and also be the karta in my new HUF ?

Reply

83 Manish Chauhan January 10, 2012 at 5:44 pm

Naren

Better initiate a thread on http://www.jagoinvestor.com/forum/ to ask these questions

Reply

84 CA Naresh Batra March 4, 2012 at 10:45 pm

Let me know who are the other members of the HUF. If your brother and sisters of HUF then you can start new HUF with your wife & children.

Reply

85 Manish Chauhan March 5, 2012 at 9:56 am

Yes , even if you are part of a father HUF , you can still open a new HUF when you are married !

Manish

Reply

86 Ajit January 16, 2012 at 12:07 am

Can one open a current account in the name of HUF. If yes, then can I pay my LIC policies which I had been paying from my personal account through my HUF Current Account since I am the “Karta”. Also, are there any restrictions in using that current account ???

Reply

87 rimpi January 22, 2012 at 4:28 pm

Can HUF make tax savings by investing in PPF account?

Reply

88 Karan Batra January 22, 2012 at 8:46 pm

Yes, Rimpi – HUF’s are allowed to invest in PPF Account and take its benefits u/s 80C

Reply

89 Manish Chauhan January 24, 2012 at 1:08 pm

Yes

Reply

90 rimpi January 27, 2012 at 3:52 pm

But I have read somewhere that HUF cannot open PPF a/c (as per amendment made in May, 2005) and that the deduction will not be claimed by it.

Reply

91 Manish Chauhan January 28, 2012 at 11:33 am

Rimpi

I checked that and Yes, you are correct .. now it cant be opened .. my mistake last time

Reply

92 rimpi January 28, 2012 at 4:14 pm

manish ji, can it be possible that a PPF a/c be opened in the name of karta/member/minor member of HUF and HUF contribute amount in that PPF from its bank account and claim deduction u/s 80 C.

Reply

93 prashant February 10, 2012 at 2:15 pm

Can a member of HUF gift/transfer the his/her individual money to HUF account?

Reply

94 Manish Chauhan February 13, 2012 at 9:34 pm

I Guess he can do that , but why !

Reply

95 Srinivas March 5, 2012 at 11:28 am

This can lead to evasion of tax. Thus this is not allowed. If done, interest on such amount is taxable in the hands of member.

Reply

96 Sarath March 9, 2012 at 12:43 pm

Hi,

Can I fund HUF Account with rental income from my individual property?
Property is on my name/individual PAN and want to put rental income on this property to HUF Account so that I can file it separately during ITR.
Please clarify.

Regards,
Sarath.

Reply

97 Manish Chauhan March 9, 2012 at 3:34 pm

No , when the property is not in name of HUF , how does it become the rental of HUF ! . does not make any sense

Reply

98 Jeetendra Raut March 9, 2012 at 2:59 pm

Very informative..!! thanx 4 sharing such a valuable advice.
but Manish Ji I want to ask that can I gift some hard cash to HUF account & then get tax exemption for the same amount from my income.

Reply

99 Manish Chauhan March 9, 2012 at 3:24 pm

NO , you cant do that

Reply

100 Ram Mohan March 9, 2012 at 5:31 pm

Amazing sir. You continue to amaze me by your enlightening articles everyday!

Reply

101 Manish Chauhan March 10, 2012 at 1:27 pm
102 rimpi March 10, 2012 at 6:11 pm

manish ji, you have not replied to my query as to can it be possible that a PPF a/c be opened in the name of karta/member/minor member of HUF and HUF contribute amount in that PPF from its bank account and HUF claim deduction u/s 80 C.

Reply

103 Manish Chauhan March 11, 2012 at 10:40 pm

Rimpi

HUF can be opened only in the name of the karta as he is head of the family and the money deposited has to be from the HUF income only .

Reply

104 K D March 17, 2012 at 6:07 pm

Hello manish,

Is it possible to take business loan on HUF? I have received my share of money by selling ancestral property which was inherited to us.. I have opened an HUF account and deposited all money there .. I am planning to start a business with that amount but will be requiring working capital loan to run that business.. So do u have any idea as to bank financing HUF? And also will that money be taxable as first i received in my personal account and then transfered it to HUF??

Reply

105 Manish Chauhan March 18, 2012 at 12:04 pm

KD

I personally do not have that level of HUF understanding, better catch a CA on this .

Reply

106 Banyan Financial Advisors March 17, 2012 at 7:06 pm

Hi Manish,
In the current Union Budget 2012, they have mentioned that if HUF would receive any sums from the members, it would not be taxable in the hands of HUF. For details have a read at http://insight.banyanfa.com/?p=546.

What would be your view point ?

Regards
BFA

Reply

107 Manish Chauhan March 18, 2012 at 12:02 pm

I havent see it in detail , but I will assume that this rule is there as you have already studied it , its good that something like this has come. but now are you sure that the CLUBBING Provisions are not there and also in this case , its easy to give something to HUF , but once that is done , that thing becomes HUF property and hence property of all the members, like say you and your brother are part of your father HUF , suppose you have 1,00,000 and that is 100% yours, now you can give that to HUF, but suppose after that the HUF is broken , your brother will the part of it .

So how is this new rule going to help ?

Manish

Reply

108 Mohit March 20, 2012 at 5:46 pm

Dear Manish,

My father had taken an insurance policy, where the policy holder is the HUF? Does this means that the lives of all the members of the HUF are insured by this policy?

Thanks and regards,
Mohit

Reply

109 Manish Chauhan March 20, 2012 at 6:37 pm

Mohit

Definately NO , HUF is just paying the premium , the primany insured person would be karta of the family or someone else specifically mentioned. So only that person life will be insured.

Manish

Reply

110 KC Guru March 28, 2012 at 2:08 pm

Dear Mr. Manish
A HUF gets contribution from its members to buy a property and puts this property on rent. My question is, in whose hands this rental income will be assessed. In HUF’s hands because the property is in its name or in member’s name, because indirectly it is the money of the members which is fetching the rent?
Thanks

Reply

111 Manish Chauhan March 28, 2012 at 2:52 pm

It will be HUF income only as the property is in name of HUF

Reply

112 Shishir Saxena July 17, 2012 at 7:31 pm

Manishji,
Then what about clubing provision?? I think Rent will clubbed to the income of contributor.

Reply

113 Manish Chauhan July 17, 2012 at 9:56 pm

Not in this case , as the property belongs to the HUF , the rental will just be HUF income only

Reply

114 vivek April 11, 2012 at 4:13 pm

Please advise:

Facts of the Case:
(i) I am having 1 share for one apartment in cooperative group housing society at Gurgaon. For which I have taken a home loan from IDBI bank in the year 2004 by depositing the original share certificate with the bank .I am availing tax benefits for the interest paid and principal amount . The same apartment is also rented out and i am showing the rent received in my income tax returns.
(ii) No conveyance deed of the flat has been carried out by me till date.
(iii) There is as scheme floated by central government under the aegis of CGEWHO for housing project at Noida in which there is one condition that central govenment employee must not have any flat/house etc in NCR.
(iv) I have made PAN card of my HUF with name VIVEK JAIN (HUF) and with the help of this i have also opened a Bank Account for my HUF.

Questions:
(i) Whether the status of property will be changed if I blend my self acquired property to HUF? Whether the same is accepted in the eyes of law? whether blending will make me eligible for participating in the scheme. legally.
(ii) Legal procedure to do the same.

Reply

115 Manish Chauhan April 17, 2012 at 8:22 pm

Vivek

Your case seems to be little complicated, better ask it on our forum : http://www.jagoinvestor.com/forum/ or meet a good lawyer !

Reply

116 Manish Bhandari April 13, 2012 at 12:09 pm

Dear Manish
i have a query,
i have ancestral agri land the income of which is shown in my return. Now suppose i form an HUF, can i transfer this land to my HUF ? and show agri income in my HUF return. If it is possible what is the procedure to do the same?

Thanks in advance & looking forward for your expert opinion.

Reply

117 Manish Chauhan April 17, 2012 at 5:08 pm

Manish

Yes .. with recent budget , an amendment was done and said that any contributions can be done by HUF members to the HUF and it will not be taxed . once you gift the Land to HUF , the further income will be HUF income only

Reply

118 Manish Bhandari April 23, 2012 at 11:26 am

Thanks a TON!!!! for your valuable time & advice. Looking forward for more informative & handy tips on Tax Planning from u.

Reply

119 Manish Chauhan April 23, 2012 at 7:00 pm

Would try my best to do that

Reply

120 Rajesh June 30, 2012 at 11:28 pm

Hello, This is very informative.

If you are aware of the IT Act / schedule where HUF members are allowed to make a gift to their HUF, please let us know.

And to extend this point further, if I am Karta of my HUF and I have some shares in my DMAT account, can I gift these shares to my HUF? Will the Depository allow me to transfer the shares to HUF? And will there be any tax liability on me or HUF?

Thanks
RG

Reply

121 Manish Chauhan July 1, 2012 at 7:22 pm

Rajesh

IN this budget now this point is allowed, you can gift it to your HUF , there is no tax liability

Reply

122 Ankur May 14, 2012 at 12:53 pm

useful detail of HUF….very informative

Reply

123 Manish Chauhan May 14, 2012 at 5:25 pm

Thanks Ankur

Reply

124 sachin May 27, 2012 at 9:55 pm

Hi,

Who all can be member of HUF ?
1. My Family has 6 members (Father, Mother, Brother, Sister-in-law, nephew and me).. When we will create HUF, will all six members details will need to be shared with Bank or where-ever required, if we open HUF in my father name ? or it will be just 4 members (Father, Mother, Me and Brother)
2. I understand my DAD can have his HUF, my brother can have his HUF with its family.
3. I got divorced, with Divorcee status, can I still create HUF ?

Reply

125 Manish Chauhan May 29, 2012 at 11:45 am

Sachin

1. You can have HUF with 4 person as mentioned , father and sons

2. Yes

3. No

Reply

126 sachin May 30, 2012 at 6:26 am

Thanks Manish!

Reply

127 sachin May 30, 2012 at 6:27 am

I have few more questions:
Question 1 :
If I settle in US and I create HUF post my marriage, How can HUF benefit to me Indivdual once I is settled in US and start paying Taxes in USA ?

As an Individual, I will be declaring all the income earned in India and that will be clubbed in my Income earned in US, but how HUF income will be treated ?

Question 2:
As on today, property in jointly my name and my mother name and I get rent divided in my Name and my Mom name, can I ask Tenant to issue me Rent Cheque in name of HUF of my share ?

Do I need to do anything before I ask tenant to issue rent cheque in the name of HUF ?

Question 3:
Can an Individual be Karta of two HUF ?

As per Law, Eldest Son get the Karta role post the father death ?
Can Eldest Son still maintain his HUF (Self, Wife and Kids) which was opened when father was Karta of his HUF ? I mean to ask, can he maintain HUF Opened by father as Karta as well as Karta of HUF created by self ?

Reply

128 Manish Chauhan May 30, 2012 at 5:35 pm

HUF will not be helpful in US

Reply

129 sachin May 30, 2012 at 7:55 pm

Thanks Manish Once Again!

Question :
As on today, property in jointly my name and my mother name and I get rent divided in my Name and my Mom name, can I ask Tenant to issue me Rent Cheque in name of HUF of my share ?

Do I need to do anything before I ask tenant to issue rent cheque in the name of HUF ?

Question :
Can an Individual be Karta of two HUF ?

As per Law, Eldest Son get the Karta role post the father death ?
Can Eldest Son still maintain his HUF (Self, Wife and Kids) which was opened when father was Karta of his HUF ? I mean to ask, can he maintain HUF Opened by father as Karta as well as Karta of HUF created by self ?

Reply

130 Manish Chauhan May 31, 2012 at 12:41 pm

Sachin

Is HUF account there at all ? If yes , then you can take the rent reciept in name of HUF.

A person can be karta of 2 HUF , why not .. like a son , who will have his own HUF after marriage and he will also be part of his father HUF , but after whose death he will become the karta

Reply

131 sachin June 2, 2012 at 12:05 am

Hi Manish,

Thanks for the prompt response!

I need clarification, I can ask rent of my share inmy HUF i.e. SACHIN (HUF), even if property is in jointly held equally in name of my dad, mom, me and my brother and property not in name of HUF ?

Reply

132 Manish Chauhan June 2, 2012 at 3:15 pm

Yes i think that should be possible

Reply

133 sachin June 2, 2012 at 11:40 pm

Thanks Manish, you are doing excellent stuff to help people understand comples stuff in easy way..

I really appreciate your help!

Reply

134 Manish Chauhan June 3, 2012 at 7:07 pm

Thanks Sachin

135 pavanN May 29, 2012 at 3:02 pm

My father deceased recently. We have neither a HUF bank account nor a HUF PAN card. We received an anscestral property. Can I apply for a HUF PAN card now with me as Kartha and my younger brother as co-parancer.

Reply

136 Manish Chauhan May 29, 2012 at 9:28 pm

If HUF was not present , then right now there is no score of using HUF PAN and all .. Why are you looking at HUF angle at all in your case !

Reply

137 pavanN May 30, 2012 at 11:16 am

Thanks for prompt reply.
I learnt HUF is automatically created on the time of marriage. So my father has technically an HUF. But my father hasn’t used it by creating any HUF account or HUF pan card.
Suppose after my father deceased we received some 15 lakhs from ancestral property.
Is it now possible to create an HUF account which my father has?
So that we can use for tax purpose as my mother along with us has other source of income exceeding minimum tax slabs.

Reply

138 Manish Chauhan May 30, 2012 at 5:30 pm

No it cant be done like this , only if the House belonged to HUF , then it can be done . An HUF account was supposed to be there

Reply

139 pavanN May 30, 2012 at 7:08 pm

Thanks for reply.

I searched in internet and found this information in a site “There is no formal procedure for creation of a HUF as it is automatically created. To form a HUF, the family must have at least two members, of which at least one person is to be male. A HUF can also consist of female members, being the wives and unmarried daughters of the male members.

It has to be created in the name of Karta, the manager / head of the family. Hence, after demise of father, it is not possible to create on his name. It can be created on the elder male member of the family.”
Please suggest the validitity of the above statement. I am confused :(

Also As per my understanding the source of HUF need not be only through an HUF. Then how come the first HUF get created.

Reply

140 Manish Chauhan May 31, 2012 at 12:44 pm

thats about existence , but you have to anywyas register a HUF and get a bank account or create a PAN card . The existence of HUF is just automatic

Reply

141 pavanN May 31, 2012 at 12:56 pm

Thanks for taking your valuble time. I am relieved that I can create an HUF in my name instead of my father as I am the eldest member.

Reply

142 Manish Chauhan June 1, 2012 at 5:05 pm

Yes ,but only for your immediate family

Reply

143 sachin May 29, 2012 at 11:18 pm

Thanks Manish! Thanks for response!

I have few more questions:
Question 1 :
If I settle in US and I create HUF post my marriage, How can HUF benefit to me Indivdual once I is settled in US and start paying Taxes in USA ?

As an Individual, I will be declaring all the income earned in India and that will be clubbed in my Income earned in US, but how HUF income will be treated ?

Question 2:
As on today, property in jointly my name and my mother name and I get rent divided in my Name and my Mom name, can I ask Tenant to issue me Rent Cheque in name of HUF of my share ?

Do I need to do anything before I ask tenant to issue rent cheque in the name of HUF ?

Question 3:
Can an Individual be Karta of two HUF ?

As per Law, Eldest Son get the Karta role post the father death ?
Can Eldest Son still maintain his HUF (Self, Wife and Kids) which was opened when father was Karta of his HUF ? I mean to ask, can he maintain HUF Opened by father as Karta as well as Karta of HUF created by self ?

Reply

144 Ankit June 1, 2012 at 12:02 am

dear sir,

first of thanx for sharing such info. however i can understand that their are some limitation at the time of sale of property , which was trf as gift from individual, after such trf it was made the family’s property, and in such condition if some family person want to sale it and other want remains and conflict in right.. then in such case what is the final conclusion ? please help me in such….. and thanx in advance…..@

Reply

145 Manish Chauhan June 1, 2012 at 1:48 pm

I didnt not understand your question at all

Reply

146 Abhas June 2, 2012 at 12:28 pm

Hi Karan, This is definitely a very interesting and informative article. Explained very well, kudos to you!!

I have a question though regarding the creation of HUF. I had actually been talking with my CA and he told me that HUF can only be created after having a child (as opposed to just after getting married). I am married, but don’t have a child yet – can I create an HUF?

I did more research and found out some conflicting reports – for instance I came across an article on TaxGuru http://taxguru.in/income-tax/meaning-formation-taxation-membership-and-partition-of-huf.html.

It states that the HUF can be created with two members and just one coparcener, but the income in the hand of the entity would not be taxed in the hands of the HUF but in the hands of the sole coparcener. Thus for the income to be taxed in the hands of the HUF, it needs to have two coparceners.

Can you please clarify this issue?

Thanks,
-Abhas

PS: I can’t understand the legal jargon very well. But this is what he reports-

In Dr Prakash B Sultane v CIT ([2005] 148 Taxman 353) the Bombay High Court held that that the property does not lose its character merely because at one point of time there was only one male member or one co-parcener.

In this case , the assessee was a doctor by profession assessable in his hands as an individual. The assessee was a member of a bigger Hindu undivided family which was partitioned on January 1, 1972. At the time of partition and right up to January 22, 1980 the assessee was a bachelor. During these years, the income from assets on partition was assessed in his hands as his individual income.

When the assessee got married on January 22, 1980, he claimed that the income from assets received on partition is assessable in status of the Hindu undivided family consisting of himself and his wife.

The Assessing Officer observed that the decisions referred to by the assessee were considered in the judgment of the Madhya Pradesh High Court in CIT v. Vishnukumar Bhaiya (142 I.T.R. 357). Relying upon this judgment, he rejected the application of the assessee and continued to assess his income from the Hindu undivided family property in his individual capacity. In the above case also, the assessee had obtained his share on partition before his marriage and, on his marriage, had claimed the status of Hindu undivided family. His claim was rejected on the ground that “until a son is born the status of the assessee would continue to be that of an individual. However, the High Court ruled otherwise and upheld the contention of the assessee that once HUF property always HUF property”

Reply

147 Manish Chauhan June 2, 2012 at 3:13 pm

I would say take the CA more seriously than the blog article , its a detailed concept , and I would not like to challenge what a CA has said

Reply

148 Ankur June 9, 2012 at 12:55 pm

I am working and my wife is housewife.

I am in 30% income bracket,

1. I understand that I can gift money to my wife and then she can invest and earn income which will be taxed in her hands? Is it correct? What is the procedure to gift? Anything to be done legally to show something is gifted?

2. If that does not work, can I loan money to my wife and then she can invest and earn income which will be taxed in her hands? Is it correct? What is the procedure to loan? Anything to be done legally to show an amount is given on loan?

3. If I create a HUF with my wife, and I (and not HUF) get some ancestral property from my father, does it becomes property of HUF or of me alone? Can my father give this property to my HUF also?
Can I divide our HUF before our children become major, with agreement of wife? If done so, how the distribution of property will be done? Does some part goes to my children also who are minor? Whatever part I get, will it be taxable or income from it taxable in my hand?

Reply

149 Vishal June 16, 2012 at 7:59 pm

Kudos to all how have contributed to this section.. well I have a question though

My father had an HUF in his name and after his demise i have become the Karta.
Now, before my father passed away he wanted me to have an HUF in my own name since i m married and have a kid.

Can one individual become Karta for two huf and what happens if one has even his grandfather’s HUF

Can anyone shine some light on the same

Thanks you

Reply

150 Manish Chauhan June 19, 2012 at 10:34 am

Yes you can have your own HUF , your grandfther HUF can also be there and you can be part of that too

Reply

151 Ankur June 22, 2012 at 7:17 pm

I want to give some money to my wife and mother as gift. Now my questions are:

1. How can I show that a particular money is gift?

2. If they invest that money and earn some profit, will that profit income be taxable to me under the provision of clubbing of income?

Reply

152 Manish Chauhan June 22, 2012 at 8:57 pm

Ankur

1. You will have to make a gift deed .

2. Yes for WIFE , no for Mother

Reply

153 Krina July 3, 2012 at 12:17 pm

Hi,

Excellent article. I wanted to understand the HUF since long.
1. If HUF is created. Can Karta start withdrawing the amounts or transfer interest received to his own individual’s account? Can this be challenged?
2. If karta has one daughter(elder) and and one son(younger) both married and having children. Who will become Karta after Karta’s death? and who can ask for partition of the HUF?

Reply

154 Manish Chauhan July 4, 2012 at 9:09 pm

Krina

1. It cant be transferred just like that , there has to be a reasoning .

2. Son will be the next karta , anyone can ask for partition as both son and daughter are both co-parancer !

Reply

155 PG July 9, 2012 at 12:43 pm

Hello,

I found your site and this link very informative. We are an NRI couple who are planning to open an HUF File. We do not have any ancestral property. It would be very much appreciated if you could kindly clear my following queries and doubts.

1. With recent announcement in budget, I understand my husband and myself can contribute to open and inflate the HUF corpus. Is there any limit to the amount we can pump in each year?

2. Will clubbing provision apply in this case? I understand if I transfer say 20 lacs to HUF and invest it say in FD for a year, the interest on this 20 lacs will be taxable in my hands in first year. Thereafter on renewal of FD this income will be taxed in the hands of HUF. Is this correct?

3. Are there any don’t in how HUF funds can be used by the HUF members?

4. I received say Rs. 1 lac and jewellery during my marriage several years ago. Can I show this as HUF asset and how?

5. Will gift received from my parents to our HUF where my husband will be Karta be subjected to the limit of Rs. 50,000? Can this gift be received in cash?

Many thanks for your valuable time and guidance,

Pooja

Reply

156 Manish Chauhan July 9, 2012 at 6:56 pm

1. You can put the money to HUF , there is no limit to it

2. NO , you can gift the money to HUF , there is no tax on it and it will then become HUF property. Even in the first year the interest will be for HUF only

3. There has to be justification for it , a member can just not take it out and buy something for himself. it has to be for HUF only

4. NO , not right now

5. Yes it can be recieved in cash .

Better meet a CA on this

Manish

Reply

157 PG July 11, 2012 at 2:48 pm

Dear Manish,

Thank you for your reply. To apply for Pan card for HUF, is the affidavit required on plain paper or stamp paper and is it required to be notarised?

Can you provide me with any sample which can be used to make the affidavit?

Thank you and regards,

Pooja

Reply

158 Manish Chauhan July 12, 2012 at 7:42 am

Pooja

I am not sure on that, whatever bank says will be applicable , better take help from our forum too : http://www.jagoinvestor.com/forum/

Reply

159 Mohinder singh July 12, 2012 at 10:11 pm

Thanks Manish the informations are very usefull. Still your cmments will help me.
I have HUF with my wife and two sons. I purchased an old house in 2004 with my savings. Now i want the old house to be demolished and merge the vacant plot to my HUF. My both sons will bring money equally for new contruction.
My questions are.
Is it sufficient if I make an affidevit on stam paper to that effect and notorise or registration is required.
should my sons pay the builder directly?
If they deposit money in HUF a/c and then money to be paid to Builder will that will taken as income of HUF and taxed in the hand of HUF.
The rented income will be taxed in whose hand?

Reply

160 Manish Chauhan July 13, 2012 at 9:30 am

Do you want to make this on the name of HUF ? In that case your sons can gift the money to HUF and then the payment can be done on HUF name , then property will be HUF’s and rent too !

Reply

161 Mohinder singh July 13, 2012 at 12:03 pm

Yes Manish you are right.I want to merge this property ( after demolishing only plot left) with my HUF ( me being karta). Now question comes
1.What is procedure to tranfer the plot to HUF.
2. The money gifted to HUF will not be taken clubing with income of my sons?
3. Any CA in chennai who can guide me correctly?

Reply

162 Manish Chauhan July 14, 2012 at 4:43 pm

You should meet a CA now , we are not aware about any CA here !

Reply

163 S.R.Srinivasan July 15, 2012 at 7:48 pm

It was a very good article. I have few questions. Please respond.
I have my wife and 2 daughters. Both daughters are married. If I want to start HUF ,
1. who will be the members.?
2. Can i include both daughters as members?
3. If I want to include either one only as member is it possible?
4. Can I restrict the HUF to only to me and my wife?
5. Can i transfer the house purchased a year back to my newly created HUF and bring the rental income into the HUF?

Reply

164 Manish Chauhan July 17, 2012 at 10:42 am

SR

1. All family with daughters

2. Yes

3. No

4. No

5. Yes

Reply

165 S.R.Srinivasan July 17, 2012 at 10:42 pm

Thank you sir. Your information will be very useful for me.

Reply

166 Manish Chauhan July 18, 2012 at 6:27 am

Welcome !

Reply

167 meera vallabh August 8, 2012 at 7:29 pm

sir,

my father expired last year leaving behind a anscestaral property on which he was getting rental income. we are four brothers and sisters ( mother deceased) and we converted it into HUF with my elder brother as kartha. IT returns was also filed and taxes paid as per huf. the rental income is being shared amongst us. kindly enlighten how the rental income of the huf property should be shown in our individual IT return. is it to be shown or not?. in case if we want to show the monthly earnings ( salary and rental income ) to the bank authorities for loan purpose how to go about it? your advice and suggestion will be much appreciated

regards.
meera vallabh

Reply

168 Manish Chauhan August 8, 2012 at 7:41 pm

Is the rental income distributed to all the members , if yes , then you will have to show it as income , But the better thing was to show it as rental income of HUF only, that way you will save on the tax part !

Reply

169 meera vallabh August 8, 2012 at 10:31 pm

thanks very much for the guidance

regards

meera vallabh

Reply

170 SANTANU KARMAKAR August 9, 2012 at 12:42 pm

HOW TO APPLY FOR PAN (HUF) AND WHICH DOCUMENTS ARE ATTACH WITH PAN APPLICATION.

Reply

171 Manish Chauhan August 10, 2012 at 6:18 pm

Better ask this on Forum – http://www.jagoinvestor.com/forum

Reply

172 Siddharth Kochar August 26, 2012 at 7:28 pm

hi, need one clarity..should one open a bank account first or have a PAN card first?

Reply

173 Manish Chauhan August 29, 2012 at 10:41 am

Siddharth

You should generally get a PAN card first, but if opening bank account is neccessary, better do it first !

Reply

174 PIYUSH JAIN August 28, 2012 at 1:50 am

hi, i heard someone say that according to new rules members of huf can contribute towards huf.
also please tell me how can i create new huf if my parents donts have a huf.
thanks

Reply

175 Manish Chauhan August 28, 2012 at 9:57 pm

Yes thats true .. for creation of HUF, meet a CA

Reply

176 Ekta Gupta August 29, 2012 at 12:38 pm

Thanks Manish for sharing the informative article. But please consider this point:
A Daughter after marriage continues to be the co-parcener of her Father’s HUF and becomes a member of her Husband’s HUF. So this way, she is the co-parcener of only 1 HUF during her lifetime and not of two as stated in the article.

Reply

177 Manish Chauhan August 31, 2012 at 1:20 pm

A women can be co parancer in two HUF , that is valid

Reply

178 Ekta Gupta August 29, 2012 at 12:49 pm

Please tell me can a HUF buy a car in name of the karta from the funds of HUF or it is to be bought in name of HUF only??

Reply

179 Manish Chauhan August 31, 2012 at 1:19 pm

It should be bought in HUF name

Reply

180 Milind Vidwans September 2, 2012 at 4:04 pm

Dear Manish

From your above article i have some quary..
I was took in last year FY11-12 Rs. 2,75,000 as gift from my mother and made a HUF with my wife and kids…
Q1. is ther any direct gift tax on above amount?
and
i have made tax saver bank deposit of 5 yeras of Rs. 1,00,000 for 80C
Q2. now finally how much tax i want to pay?

and if same thing do for the current year? then…….

Reply

181 Manish Chauhan September 2, 2012 at 7:52 pm

Milind as of now now after 80C investment , the taxable income is just 1.75 lacs , which is not taxable finally. If you do the same thing this year , then again same thing will happen

Reply

182 Sharad September 5, 2012 at 3:12 pm

Dear Manish,

A very basic question….In case there is no ancestral property then how HUF can earn income? Can I (being Karta) transfer a certain amount in HUF a/c and that can be considered as a income of HUF?

Thanks.

Reply

183 Manish Chauhan September 5, 2012 at 7:38 pm

The transfer will not be income, it will be an asset, the asset if earns anything after that will be considered as income

Reply

184 Sharad September 5, 2012 at 9:59 pm

Perfect and Thanks…..But am I right in concluding that if I transfer 100,000/- per year to HUF a/c…..that will be considered as an asset for HUF and HUF has to pay tax (according to limits) for whatever earnings made on that asset/investment???

And let me tell you Sir, that you ROCK. Even after googling so much time, Your article was the only one which gave me maximum clarity on HUF!!!

Reply

185 Manish Chauhan September 5, 2012 at 10:23 pm

Welcome , spread the knowledge !

Reply

186 Sharad September 5, 2012 at 10:35 pm

Sir….the question remains……am I right in concluding that if I transfer 100,000/- per year to HUF a/c…..that will be considered as an asset for HUF and HUF has to pay tax (according to limits) for whatever earnings made on that asset/investment???

Reply

187 Manish Chauhan September 8, 2012 at 10:34 pm

Yes .

Reply

188 ramesh September 12, 2012 at 9:05 pm

Dear Sir,

Compliments.

I stared helping my father helping financially at the age of 13 years by milking and selling milk, at the age of 16 joined Indian Army as a boys Apprentice in 1979, I stated giving money to my parents and did not open my self -bank account to keep my earning separate. I left the Army in 1991 and handed over Rs. 86000/- to my parents this includes the commutation of my pension for 15 years.

We are 5 siblings 3 brothers and 2 sisters. I am the eldest among brothers. I married at the last in the family. My younger brothers are well settled and are happily married.

During time my youngest brother and his working wife has purchased their own flat in Delhi. At he partisan and distributing the property the whole property worth were 30 lacs. This does not includes the worth of the property they have purchased on their own name. In our family we were having 2 flats and some agriculture land. And the total value was 30 lacs.In 1999, my father divided the share my brothers got a flat each and I was to give 10 lacs but my father deducted 3 lacs from my share. Out of which 2 lacs my youngest utilized to pay for the instalment of the flat they have purchased. And 1 lac was utilized by my younger brother.

On being not satisfied i left the home along with my wife and one son in Jul,2000. In Sep, 2001, my father gave me a cheque of 4lacs and 95thousands . This is the only share I got from my father. When I asked my parents abut my share in the flat my youngest brother has purchased living in a joint family, my parents says he has earned the flat from his own earned money, and I had no right to claim on it. When I told them that I have also handed over Rs. 86000/- to you at the time of my retirement from the Army, if I would have also purchased the flat from this money, and now the the coast of that flat could have been 80 lacs now.

In between my respected father expired in the last May, 2012.

He had not written any WILL.

Is there any law as to how i can claim my share from the flat from my younger brother.

Pls advise.

Regards and thanks

Yours truly,

Ramesh

Reply

189 Manish Chauhan September 13, 2012 at 10:24 pm

Ramesh

Sorry to say but law does not have any place for emotions and good ness you did . As your brother has bought the flat on his own funds and your father divided things in start itself (and by now I am sure the flat must be on his name) , I dont think legally you stand any chance of getting anything .

I must say you must have thought about yourself more than others at some point of time.

Manish

Reply

190 A Rao September 16, 2012 at 5:52 pm

If I have an HUF account at a bank and wish to deposit cheques/income recieved in my personal name as Karta or that of my coparceners in my HUF account, can my bank refuse this? If yes is it because its a totally different entity from me and my family members? Any RBI clarification on this available?

Reply

191 Manish Chauhan September 16, 2012 at 6:45 pm

As far as I know , in this recent budget, HUF members can contribute money from their side in HUF .

Reply

192 Radhika October 2, 2012 at 9:18 pm

Manish, i am working as a Home loan credit manager in MNC Company.
i received a home loan request from HUF for the same i have to collect Annexure 5
Please tell me about annexure 5 and please send me the Annexure 5 format to me … i am very great ful if i get today ….
thank u in advance

Reply

193 Manish Chauhan October 4, 2012 at 6:58 pm

Radhika

I am not aware about that.. but I am sure someone from our forum will have knowledge on that – http://www.jagoinvestor.com/forum/

Reply

194 Srinivas October 9, 2012 at 10:18 pm

Hi Manish,
I am planning to apply for a HUF PAN Card. I have a few questions:
i. What would be date of incorporation? Can I put it as 01-01-0001 if I am unsure about it?
ii. After getting PAN card and opening a bank account, Can I put around 6 Lakhs cash in the account (assuming 1.5 lakhs tax-free slab amount for 4 years) for 2009-10 to 2012-13? Source of income is agricultural income from 25 acres of land.
iii. If I have paid an LIC term loan policy of Rs 112000 p.a. for last two years from my individual account and have not claimed it under 80C, can I add another 224000 Rs to the account?

Thank you.

Reply

195 mmd October 10, 2012 at 11:46 pm

thank u

Reply

196 Manish Chauhan October 12, 2012 at 3:09 pm

I suggest you take help of a CA on this , he will guide you with internal issues like these

Reply

197 Nina Agarwal October 11, 2012 at 2:20 pm

Hi Manish,

First of all thanks for the info. I have some doubts. My father opened HUF bank account just for the sake of income tax purposes. He has earned money and tranfered to HUF. Later on he purchased some property from the HUF account. Here I would like to mention that there is no ancestral contribution to his income except that he got a little land from his forefathers. Now the Q is will that property becomes HUF even though he self-acquired it and who inherits the property?

Reply

198 Manish Chauhan October 12, 2012 at 11:09 am

Its a HUF property and all the members of the HUF will get it , you are also part of the HUF . You can ask for your share whenever you want

Reply

199 raj chaudhary October 20, 2012 at 7:53 pm

respected sir

sale of property by huf having long term capital gain can be used to buy a residential property or not ??????? noida authority does not allow it ????? kindly help asap

Reply

200 Manish Chauhan October 22, 2012 at 9:57 am

They do not allow what ? The sale !

Reply

201 rimpi October 22, 2012 at 2:32 pm

I wanted to ask whether HUF can give cheque in the name of person from whom Karta is getting his business items i.e. Karta’s creditor.

Reply

202 Manish Chauhan October 22, 2012 at 3:33 pm

Yes why not

Reply

203 aviral October 29, 2012 at 4:20 pm

Can I form a HUF with the self acquired house (asset) with my wife and married son? What will be rental income look like? Will be as my income, being Karta – or, will be of HUF’s? To my understanding, with the inputs from this informative forum – it will be HUF’s income and to be seperately filed. Question remains – how the expense of household can be accounted for?

Reply

204 Manish Chauhan October 29, 2012 at 6:18 pm

You can do that, but then you will have to assign the house to HUF . It will be HUF income

Reply

205 shipra November 16, 2012 at 1:57 pm

Manish, great article. I have a question. I have a house. I would like to rent it out. But i don’t want to pay enormous amount of tax on that. So I was going through the various ways of tax planning to save tax on rental income. I was thinking of either creating a HUF or forming a Company. There are lots of issue in opening a HUF, what, if later on,one party asks for his or her share. I want to avoid all these issues. So, is it better to go for formation of company and plan accordingly?

Reply

206 Manish Chauhan November 20, 2012 at 4:38 pm

You cant avoid those issues if you do a HUF, thats why most of the people dont make it :)

Reply

207 Tushar Pal November 25, 2012 at 5:42 am

I am planning to open a ice cream parlour on my father’s name. he is retired & comes in 20% slab. We wan’t to open an HUF on his name. We have applied for HUF pan card. Now for registration of HUF, does he need any gift cheque from his father or big brother to be shown as gift amount? If yes, then is there any alternative for that.

Reply

208 Manish Chauhan November 25, 2012 at 10:55 am

Why will he need it from his father ? Who is contributing the money into the HUF ? You need the contribution form that person

Reply

209 sanaya December 16, 2012 at 2:56 pm

The family members who are not included/declared (such as married daughters and not part of the family) in the form while opening the HUF account will also be considered as members/coparceners??

Reply

210 Manish Chauhan December 19, 2012 at 2:24 pm

Not sure on that ..

Reply

211 Anuj Mittal January 8, 2013 at 7:21 pm

Does it makes sense for a married couple to form a HUF if both of them are in 30% tax bracket but don’t have any ancestral asset ?

Reply

212 Manish Chauhan January 9, 2013 at 9:22 am

Depends on your complexity . Meet a CA and he will show you how it will help you or not help you . Just because one is married, they should not get into HUF !

Reply

213 Sanjeev January 21, 2013 at 5:19 pm

Sir I have a question
Can HUF do business in the another name?

Reply

214 Manish Chauhan January 22, 2013 at 11:28 am

What do you mean by another name ?

Reply

215 Moreshwar Narkhede January 24, 2013 at 2:08 pm

yes it can,

Reply

216 Moreshwar Narkhede January 24, 2013 at 2:14 pm

Dear sir, Thanks for your article.
I have a doubt. My grandfather alive having ancestral property. But my father was died without any huf. So can I open Huf account by receiving gift from my grandfather instead of father

Reply

217 Manish Chauhan January 24, 2013 at 5:08 pm

Yes you can do that

Reply

218 Ashok Kumar Goyal February 7, 2013 at 10:53 pm

One Question
Can gift give Anil Kumar to Anil Kumar Huf for New Huf file creating,
means self can give to self karta for new huf file.
thanks

Reply

219 Manish Chauhan February 11, 2013 at 8:08 pm

Yes

Reply

220 Vinay March 5, 2013 at 3:39 pm

I don’t think it is possible as clubbing provisons will come into the picture. Better get a gift from someone else such as your father/mother/Brother etc…

Reply

221 Manish Chauhan March 13, 2013 at 1:34 pm

We are not talking about clubbing provisions here .. its the question of whther the tax is paying on the amount recieved as gift !

Reply

222 Sachin Yeravadekar February 11, 2013 at 1:41 pm

Can i open new PPF account in name, this year and deposit money? I was given to understand that money cannot be deposited in PPF account after 15years, is it true?

Reply

223 Manish Chauhan February 11, 2013 at 3:43 pm

You cant open a new PPF , one person can open just 1 PPF account. Regarding what happens after 15 yrs, check this out – http://www.jagoinvestor.com/2012/06/ppf-account-rules-after-maturity.html

Reply

224 Sachin Yeravadekar February 12, 2013 at 11:54 am

since the discussion was about PPf account – What i meant was, whether i can create new HUF with my wife or myself as karta, and then open a new PPF account?
I don’t have old PPf account.

Reply

225 Manish Chauhan February 18, 2013 at 3:09 pm

Yes, thats possible

Reply

226 Sanjeev Garg February 25, 2013 at 11:38 pm

Sir, I stays in my own flat in Delhi. A per my company norms I have signed a self lease with my company and getting a rent from my company. As a result I pay double tax on Rented income i.e. 1st as perquisite and 2nd 30% on total rent as owner.
Can HUF help in saving tax?
do I need to re-sign a self lease between HUF and my company?

Please advise.

Regards,

Sanjeev Garg

Reply

227 Manish Chauhan February 27, 2013 at 10:12 am

Sanjeev

A better answer will come from our forum for sure, please start a thread there – http://www.jagoinvestor.com/forum/

Reply

228 Arun Suddarshan March 8, 2013 at 12:12 pm

Sir,

My wife who is a coparcener in my HUF .Is it possible for her to become a Karta for her ancestoral properties?

Reply

229 Ashal Jauhari March 18, 2013 at 12:36 pm

Dear Arun, what’s the current status of your wife’s maternal HUF? is there any Male member in it or not?

Thanks

Ashal

Reply

230 Dhaval March 25, 2013 at 9:06 pm

Please can you confirm if the HUF can pay premium or invest in PPF in the favor of the member / karta

Please confirm who will receive the Tax benefit for the same.

I am looking at investing in PPF account of my Mother from the HUF account

Reply

231 Manish Chauhan March 27, 2013 at 11:10 am

If HUF is investing and only HUF can claim the benefit , not the member

Reply

232 ashal jauhari April 17, 2013 at 5:58 pm

Dear dhaval, in your query, are you talking about your own HUF or your father’s HUF which is going to invest money in to Mother’s PPF account? the answer ‘ll be different for each case of HUF.

thanks

Ashal

Reply

233 Sanjib March 29, 2013 at 5:10 pm

Can I as Karta of A HUF withdraw money from HUF account for the purpose to meet with any other members personal expanses / education / marriage ?

Reply

234 Manish Chauhan April 3, 2013 at 11:12 am

You can do that .. If the member is the part of HUF , it can be shows as a regular expense , but not sure if you will get any benefit on tax front ..

Reply

235 Kiran April 8, 2013 at 12:56 pm

Hello
Me and my wife are salaried. My wife has a shop on her name ( taken from my mothers selling of land – after she died ) and we also have another shop on my name and her name. Can we transfer both these shops to HUF ? If we can transfer , then how does one do it ? The shops agreement papers are still on diff names . Do we have to re – register it ? Or do we have to sell it to HUF by creating a NEW agreement ?

Regards
Kiran

Reply

236 Manish Chauhan April 12, 2013 at 12:24 pm

that would not be such an easy thing to explain here , better meet a good CA for this

Reply

237 Ajeeb o Gareeb April 24, 2013 at 9:04 pm

Hi,
Great article and a wealth of information from the comments below as well.
Can you please answer one question: I have a vehicle in my name, which I would like to transfer to my HUF. This vehicle would be used for commercial purposes and the income earned would go to the HUF.
Is such a transaction allowed and for the transfer to take place, what documents would be required?
Would a gift deed describing the details of the vehicle sufficient; or do I need to get the vehicle transferred from the RTO in the name of the HUF with a change in the Blue Book / Registration Cert. as well?
An answer would be extremely helpful.

Reply

238 Manish Chauhan April 26, 2013 at 11:05 am

I dont know this answer truely speaking .. but I am sure you will get it from our forum – http://www.jagoinvestor.com/forum/

Reply

239 Ashal Jauhari April 30, 2013 at 3:42 pm

Dear Ajeeo o Gareeb, if you are transferring the vehicle with out any price consideration from HUF to you, it ‘ll not be accepted by Income Tax people. So better to sell your vehicle officially to HUF & then only earn income from this vehicle.

Thanks

Ashal

Reply

240 Darshit May 9, 2013 at 8:30 pm

I am US citizen, Patel by cast, my father is on Death bed. I do not have HUF at present. Can my father give his property in favour of my HUF? Do I have to offer tax on income generated from such property to US tax authorities?

Reply

241 Manish Chauhan May 10, 2013 at 3:07 pm

Darshit

We have no idea about US tax laws

Reply

242 Darshit May 10, 2013 at 4:56 pm

Thanks Manishji;

What about 1st half of the question? Can my father provide in will to transfer his assets in his absence to my HUF (which not existing at present and I wish to create the same by will only)? I am married Hindu having citizenship of USA.

Reply

243 ashal jauhari May 27, 2013 at 4:19 pm

Dear Darshit, as you are married, your HUF is already in place. Regarding the taxation of USA on the father’s property transferred to HUF, please check with US Tax professionals.

Thanks

Ashal

Reply

244 SURESH May 14, 2013 at 11:40 am

very clear interpretation of HUF. Views from all angles have been brought out. Wish you write many articles on taxation.

Reply

245 Manish Chauhan May 18, 2013 at 1:14 pm

Welcome Suresh !

Reply

246 Pavan May 27, 2013 at 2:42 pm

My father has FD for around 5 lacks. He has expired. Now can I trasfer those FD into my HUF.

Thanks
Pavan

Reply

247 ashal jauhari May 27, 2013 at 4:17 pm

Dear Pavan, yes is the answer.

thanks

Ashal

Reply

248 Manish Chauhan June 1, 2013 at 9:42 am

Only if you can prove to be the sole legal heir .

Reply

249 sparsh shah September 12, 2013 at 5:19 pm

greetings for the day,

kinldy clear my doubts.
I am a salaried person along with service I plan following.
I want to start a manufacturing business with the use of some machinaries ….worth 5 lacs …appx…

shall I purchase my machines on the name of an HUF – as a properitor firm and start a small business ?????

Reply

250 Manish Chauhan September 17, 2013 at 7:28 pm

What are your long term plans and revenue potential . It would be a good idea to consult a CA on this

Reply

251 Divorced Mother October 2, 2013 at 1:21 pm

Hi,

I am a divorcee with a child. Would like to understand whether I can create an HUF.

Thanks!

Reply

252 Manish Chauhan October 7, 2013 at 8:14 am

Hi I am not very clear on this, can you raise a thread to discuss this on our forum – http://www.jagoinvestor.com/forum/

Reply

253 jram November 11, 2013 at 6:59 pm

I am an NRI and had contacted Central Bank of India reg opening of HUF account but the Manager declined to open the account saying “According to our Bank’s practice HUF accounts are not opened for NRI. Please be guided accordingly”. Please note that I am the Karta and including me all members of HUF are NON-RESIDENTS. Is it possible for someone to pls provide the RBI circular or any such govt notice so that I can again go the branch with this info. I tried searching for this on RBI website myself but could not get it. I hope someone could help me with relevant info.

Reply

254 Manish Chauhan November 12, 2013 at 5:39 pm

I guess you already asked this on forum ?

Reply

255 jram November 12, 2013 at 6:38 pm

Hi Manish, I have asked this in the forum but so far unfortunately no responses.

Reply

256 Manish Chauhan November 12, 2013 at 6:56 pm

You mean you asked on http://www.jagoinvestor.com/forum ?

Reply

257 jram November 12, 2013 at 7:00 pm

Yes, Pls see link below for the same ques I had asked in Jagoinvestor forum : http://www.jagoinvestor.com/forum/can-nris-open-huf-bank-account#.UoIsz5Fg6jI

So far no replies

Reply

258 Manish Chauhan November 12, 2013 at 7:54 pm

Hi

I have asked a CA friend to answer on this . I am ignorant on that !

Reply

259 Rishant Sharma December 24, 2013 at 11:07 am

Many Thanks for nice article and useful information. I have a few questions.

1. I have a joint flat with my wife which I want to sell. Can I create a HUF (me & my wife) and transfer the Capital gain amount to HUF to minimize the taxes?
2. Will the creation of HUF make the joint property part of HUF (as HUF members will be me and my wife)?
3. If the HUF account is not transacted for long time, is that a problem? Any inactivity threshold by banks?
4. Can I continue to put our LIC, health insurances under HUF. I think yes.

Thanks
Rishant

Reply

260 Rishant Sharma December 24, 2013 at 11:09 am

I forgot to mention that my wife is not working.

Thanks
Rishant

Reply

261 Manish Chauhan December 25, 2013 at 9:05 am

Hi Rishant

These are deeper questions in respect to HUF , I suggest you meet a CA and discuss these with CA

Reply

262 suranaprafful January 29, 2014 at 2:46 pm

Dear sir,
My parents are quite old & brought them to hongkong resently where i live.My father has a huf property in his name & i am the only son.He want to gift this property to me,because he does no want me to face all the problems in india after he dies as I do not know about taxes in India.
Can you pls advice me about this matter .
regards
Prafful Surana.

Reply

263 Manish Chauhan January 30, 2014 at 4:53 pm

Whats the advice you need in this case, its straight forward now . Just visit back India and ask your father to transfer things on your name (I mean HUF should transfer, your father will take actions as KARTA) .

Thats all .. If this is not done right now, then later you will have to execute a WILL or things will happen as per Hindu succession act . Given that HUF is involved here, I suggest that better complete things right now to avoid running around later!

Also get in touch with a good CA also

Manish

Reply

264 Srinivas February 10, 2014 at 3:37 pm

Another point to be noted while routing funds to HUF.

HUF can recieve only upto Rs 50000 per year without any onsideration. If the inflow is in exess, tax incidence will happen.

One way to mange this is tak loan from relatives and pay nominal interest. For example, I can take a loan from my mother, then pay back 8% per year which she normally gets in any FD. I inturn can invest for better returns amd the balance can be inom of HUF.

Reply

265 Manish Chauhan February 14, 2014 at 5:18 pm

Thanks for sharing that, I think that 50k limit is the gift tax limit !

Reply

266 Srinivas February 15, 2014 at 9:19 am

True.

However, HUF can take loan from a relative at a reasonable rate and invest the same, for its advantage.

Reply

267 spguptahyd February 28, 2014 at 7:34 pm

I want to open HUF a/c.Mainly because my son in US has a house here,which is rented.The rent is being credited to SB joint a/c with my son and my wife. Now tenant is asking for giving the PAN card number. Can i give my wife’s PAN number or my son(NRI) PAN number. My friend suggested to open HUF a/c and HUF PAN card and give this HUF PAN number to the tenant. Please advise. Your article on this subject is excellent and made me think twice/thrice whether to apply for HUF PAN card or not.

Reply

268 Manish Chauhan March 2, 2014 at 6:37 pm

Being a bit technical, I suggest you open this question on our forum http://www.jagoinvestor.com/forum

Reply

269 poornima March 7, 2014 at 3:06 pm

please help me to know is nomination allowed in mutual funds for the investment made under the HUF status .

second in the death of the karta can the proceeds be transfered to the wife with the nOC from the other coparcerners

Reply

270 Manish Chauhan March 12, 2014 at 5:52 pm

Nominations are always allowed in mutual funds ..

Reply

271 Kishore March 8, 2014 at 6:36 am

Hi Manish,

I am unmarried and my father is having an HUF account and he is the karta & member are my mother and sister for that account. Can he open another HUF account having only male member (i.e) father & myself

Reply

272 Manish Chauhan March 12, 2014 at 5:41 pm

No he cant, its not opened like this, it automatically exists the moment he was married .

Reply

273 Nitin March 21, 2014 at 5:07 pm

Dear Manish,
1. My mother was expired in 2012, my father can form a HUF,
2. I m a divorcee, can I form my own HUF

Rgds
Nitin

Reply

274 Manish Chauhan March 26, 2014 at 1:32 pm

If you do not have a family, then I dont think HUF exists anyways .

Reply

275 Binny March 22, 2014 at 3:45 am

Very informative article!

Just one query: Lets say A(karta), B(wife) are part of a HUF.
Can B give the gift to HUF? If yes, lets say B gives 100,000 to HUF and HUF invest that money in FD. Will the interest earned be clubbed to the income of B?

Thanks!

Reply

276 Manish Chauhan March 26, 2014 at 1:29 pm

Yes B can give the gift and after that it becomes property of HUF and income earned on that will be HUF income only

Reply

277 Kalpesh . April 23, 2014 at 2:16 pm

Hello sir , can I open my huf account as I’m married and father of two kids , and loan some shares to huf so that it can do some trading and at the end of year it will give back me my shares , that way my shares long tearm capital gain won’t get used and income created by huf so text liabilities also will remain with it only .

Reply

278 Manish Chauhan April 30, 2014 at 10:31 am

This is a complex thing overall , better take a CA suggestion on this

Reply

279 Subhashish May 10, 2014 at 12:12 pm

Hi Manish,
I have a question to ask. Can paying 15000 Rs per month( from my salary) to the HUF account (me & my wife) as monthly domestic expense which my wife needs per month , be treated under income tax act? Can I get income tax benefit on my personal income on account of this payment which is a real case indeed?

Regards,
Subhashish

Reply

280 Manish Chauhan May 19, 2014 at 1:35 pm

No you cant !

Reply

281 Rakesh Kumar June 14, 2014 at 2:58 am

Hi Manish,
For creating HUF, can you let me know the following:
Ques:1. My wife will be considered just a member or coparcener
Ques:2. What will be the status of following gifts(money) to HUF (Will it be treated as income/exempt from income)
a) From my Father to HUF
b) From my Father-in-law to HUF
c) From my Wife to HUF (will there be any clubbing of income)
d) From myself to HUF(will there be any clubbing of income)
Ques:3. Once HUF is created, how can be disolved?
Ques:4. What happens to the money when we get it after the HUF is disolved, does it becomes taxable or is inheritence

Reply

282 Manish Chauhan July 5, 2014 at 4:13 pm

Hi Rakesh

I think a lot of rules have changed in between . Better to consult with a CA on this now

Reply

283 Rakesh Kumar June 20, 2014 at 1:37 pm

Hi Manish,
Can you validate the below that “An HUF can consist of just two members, one of whom is a coparcener. However, for tax purposes, the income of such an entity would not be taxed in the hands of the HUF; it would be taxed in the hands of the sole coparcener. For an entity to be taxed as an HUF, it should have at least two coparceners. Thus, the income of an HUF consisting of a husband and wife would not be taxed in the hands of the HUF, except in cases where the husband has received funds on the partition of a larger HUF.”

Reply

284 Manish Chauhan July 3, 2014 at 11:29 pm

Hi Rakesh

This article has been quite old now .. I am not sure of the current rules change .

Reply

285 Ramegowda July 27, 2014 at 7:09 pm

I and my wife with two minor childerns want to farm a HUF , I purchased one Commercial Site and constructed Building, now it is started to earn Rent of Rs.5,00,000/ per Month Can I farm a HUF, and save tax liablility. I and my wife are not working. And is it I will be a kartha, can i Gift my own property to my own HUF ?

Reply

Leave a Comment