14 August 2013
A family consists of (1)A 83 Year Old Male (Mr. X) (2) His Wife (3) Elder Son (4) Elder Son's Wife (5) Elder Son's Son (6) Elder Son's Son's Wife (7) Younger Son (8) Younger Son's Wife (9) Daughter (Widow) (10) Daughter's Elder Daughter (11) Daughter's Younger Daughter . All the Member's are residing in Gujarat . Mr. X wants to create HUF Entity .
Questions :- (1) Mr. X would be the Karta but who would be the Co-parceners ? (2) Who would be the Members of this HUF? (3) Is it possible if Mr. X wants to include ONLY himself , his wife & his Younger Son in this HUF & appoint his Younger Son as the Karta ? (4) In case Mr.X's Wife wants to create the Capital of this HUF by gifting portion of her own Assets (Bank Balance) to this HUF , will any Gift Tax have to be paid by the HUF or Mr. X's Wife , & if so ,what percent ? (5) In case , Mr. X's Brother gifts funds to this HUF (to create it's Capital) , will any Gift Tax have to be paid & if so , what percent ? (6)What would be the Share of each Co-parcener/Member in the Property/Income of the HUF ? Please explain clearly & seperately how the share will be in case of (i) Property & (ii) Income of the HUF . (7) What will happen after Death of the Karta ? (8) What would be the Tax Benefits of creating this HUF ?
20 October 2014
1)Co-parceners shall be all the male members of the HUF who can claim the assests of the HUF.
2)All the members in your family, including your wife, children, their wives and their children. can be the members of HUF
3) Not possible. Eldest member in the family has to be Karta. Hence younger son cannot be appointd as Karta.HUF is created by the Hindu law which does not allow exclusion of any male members from the family. Hence Elder son has to be included in the HUF mandatorily.
5&6) Members giving gift to HUF shall be liable for clubbing provision under income tax act. Hence it is notadvisabel for any member to transfer any asset to huf. Mr. X brother can gift to huf but only upto rs 50,000. Anything in excess of Rs 50000 will be taxable in the hands of Huf. Gift tax is abolished now.
7) After the death of karta, the eldest member in the family shall be the new karta of the family.
8)An HUF is considered as seperate legal entity under income tax act 1961. Hence any income earned through the assets of the huf shall be taxed in the hands of the huf and not in the hands of individual members.
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