Huf is considered as such until partition: Once a HUF is formed, you must continue to file its tax returns unless a partition takes place. Any request for sharing is addressed to the evaluator. The notator must, after receiving such a request, apply to members after being informed in a timely manner. Income from the split property is taxed as the member`s individual income. If the member forms an additional huf with his wife and children, the income from the property transferred from the original HUF will be taxed in the hands of the new HUF. A HUF is taxed separately from its members, so that deductions (such as section 80) or tax exemptions can be invoked by it separately. For example, if you and your spouse decide to create a HUF with your 2 children, all four of you and the HUF can claim a deduction for section 80C. HUF is generally used by families as a means of building assets. Notwithstanding the provisions of paragraph 171, paragraph 9, in some cases tax planning can still be used.
A HUF that is not considered an undivided family can still be subdivided because it is recognized by Hindu law and such a division does not require recognition of the 1961 Income Tax Act. Thus, a larger HUF, which has already been evaluated as such, can be divided into small HUFs and these smaller hufs can continue to be partially partitioned before being considered HUF. In addition, huf, which is not yet taxed, may be partially split and taxed thereafter. If the ownership of HUF members was acquired with loans from the HUF, which was then repaid, the income of that property would be considered as individual income of the members The distinction between ordinary huf and certain HUF`s was removed w.e.f. 1.4.1997, i.e. 1997-98. For the 2007-08 evaluation exercise, the tax rate for all HUF would be the same as for an individual. This change in tax rates has provided a great deal of relief for some HUF, i.e. HUF with one or more taxable income members.
After the above amendment, which ruled out the concept of specified HUF, w.e.f.f. A.Y. 1997-98 this method of tax planning will be much simpler and will bring more tax relief for HUF. 1. The Hindu Undivided Family (HUF) is a peculiarity of Hindu society. Hindu Undivided Family is defined as composed of a common ancestor and all its male lineages descended with their women and single girls. Therefore, a Hindu family is composed of males and females. Although HUF seems to be the perfect way to save taxes as a family, it has its own drawbacks.
AND THE adult male members of the Hindu seal family are present in … and agreed to enter into a partnership agreement with the part of the first party in order to expand and manage this activity on a large scale in order to avoid competition between them.