Huf

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2018 How one can create HUF under Income Tax Act 1961

HUF Deed Format is also required and by taking gift from whom HUF can be created

Sunil

Sunil (Expert)
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24 April 2018 HUF is a coparcenary that exists by law. You do not create it. It is already there in Hindu families and continues till 3 level of lineage. However, what you are concerned with is how to activate what exists by law to have a corpus of its own and act as an independent entity distinct from yourself or other coparceners (family members). If someone gists you money for the benefit of the family (say your inlaws) you will have to pay tax for IFOS if amount is received more than 50000. If your HUF pays the tax you can invest these funds into income generating assets and be assessed separately for the income. You can invest funds into business also. However, take care that it should be a family business and not a business that is based on your personal efforts like commission or agency business. Also there should be no element of professional in it. Another caution, tax saving instruments like PPF are not allowed to be invested in HUF. You will have to find other avenues like mutual funds etc. for tax saving instruments for HUF. You can avail section 44AD.

If you can manage creating the independent corpus the go ahead and create the deed listing name of all coparceners and that you are karta using stamp paper value as per your state. Then apply for PAN etc. and transact. But in case you make a hotch potch you will land up having clubbing of income.