Key Points In Creation Of HUF, Tax saving in HUF AND Format of Affidavit for HUF creation and for apply PAN of HUF

KEY POINTS IN CREATION OF HUF AND FORMAT OF DEED/AFFIDAVIT FOR CREATION OF HUF:

  • Under the Income Tax Act, an HUF is a separate entity for the purpose of income tax return.
  • The same tax slabs are applicable to HUF as to individual assessee.
  • You can not transfer your own assets/money into HUF.
  • If you have ancestral property and earning some income from this property, then it is better to transfer this asset to HUF and save tax up to exemption limit applicable to individual.
  • You can transfer the money received on sale of ancestral property /assets into your HUF.
  • The income from property of HUF can be further invested in instruments such as shares, mutual funds, etc. and will be assessed under HUF.
  • Existence of property or multiple members is not a pre-requisite to create HUF. A family which does not own any property may still have the character of Hindu joint family. This jointness is understood in terms of faith and food. This is because as a Hindu is born as a member of the joint family.
  •  Any gifts received by the members of HUF (birthday, marriage, etc.) can be treated as assets of HUF.
  •  The HUF is taxable as separate person under income tax hence one can save tax from basic exemption of Rs. 2.50 lakh. HUF will also gain from the tax slab structure of computing income tax.
  • Apart from basic exemption of Rs. 2.50 lakh, section 80C deduction up to Rs. 1.50 lakh is also available.
  • For example, if you are in 30% tax bracket, then approx tax saving by creating an HUF will be as follows:
    •   Basic exemption up to Rs. 2,50,000 = nil
    •  Rs. 2,50,001-5,00,000 @10% = Rs. 32,000
    •  Rs. 5,00,001-10,00,000 @20% = Rs. 50,000
    • 80C deductions Rs. 1,50,000
  • Therefore total tax payable for HUF on income of Rs. 6,00,000 is only Rs. 21,430.
  • If this income of Rs. 6,00,000 is taxed in individual hand @ 30% tax due is Rs. 1,85,400.
  • Hence, you can save a total of Rs. 1,63,970 by creating an HUF and transferring ancestral property income and other income under HUF.

AFFIDAVIT FOR HUF

 

I, ___________  son of __________  aged ___ years, resident of _______________ and as Karta of my Hindu Undivided Family (HUF) affirm on oath and declare as under :-

 

  1. That I am a Karta of our HUF which is known as ___________ (HUF)

 

  1. That as on today, name of coparceners (including name of Karta) our above said HUF, their father name and their addresses are as under :-

 

S.No. Name Of Coparceners Name Of Father Address
 1.
 2.
 3.
 4.

 

  1. That the above said HUF is in existing since __________

 

 

 

 

Place :

 

Date :                                                                                      …………………

Deponent

 

Verification

 

I _________ son of Shri _________ hereby verify that as per my best knowledge above mentioned contents of this affidavit are true and correct and nothing was hidden there from.

 

…………………………….

Deponent

Regards,

CA Lalit Aggarwal,
9999565491,
lalit.agrwal@gmail.com

  • Anup Gupta says:

    Dear Sir,
    Whether a wife may be treated as co-parcener in the husband Huf? Secondly whether a married daughter will be treated as co-parcener in huf? Thirdly Shall i include their name in affidavit?

    January 15, 2017 at 4:11 pm
    • admin says:

      Yes, a married daughter is considered a part of HUF. Prior to 2005 amendment in the Hindu Succession Act, 1956, the daughter, on her marriage, ceases to be a member of her father’s HUF and becomes a member of her husband’s HUF. However, after the amendment the daughter married or unmarried, is now considered as co-parcener like a son.

      However, in her matrimonial house she is treated as a member and not as a co-parcener of her Husband’s HUF. Thus in event of partition of her Husband’s HUF she has one share in such property.

      January 16, 2017 at 7:49 am

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