26 August 2010
We have formed an HUF entity long back but did not prepare any deed for it nor bank etc. asked for it so far. Pl. advice if there has to be any deed and if so do we need to register it ? Pl provide a format as well if required by law?
27 August 2010
dear HUF is Hindu Undivided Family and HUF is not a formation. under daybhag every hindu is a member of HUF since birth and even the unborn child is also the member of HUF. so there is no need to prepare a deed for creation of HUF. it is the creation of law.
27 August 2010
FORMAT OF HUF CREATION DEEDS FORMAT-I
I, ________________, S/o__________________ Residing at ______________________ aged ___ do hereby declare-
1. That I am Karta of ___________________ .
2.That I received on behalf of the H U F gift of Rs. ___________ by way of CASH/CHEQUE from my FATHER ________________(name of relative of karta of HUF) on dt. _______________ this formed the corpus of the HUF.
3. That the HUF at present is consisting of the followings members- I) Shri _____________________, Adult, Residing at _________________ II) Smt. _____________________, Adult, Residing at _________________ III) Kumari _________________-Minor, Residing at ___________________
4. That the above statements are true to the best of my knowledge & belief. Declare this on _________________
WITNESS: Signature 1. ————————————–
FORMAT- II DECLARATION OF GIFT MADE BY ______________ TO THE HINDU UNDIVIDED FAMILY OF _________ I,_____________________________, residing at_________________________________________________, do hereby declare and affirm as under:
1. That out of natural love and affection borne by me towards the Hindu Undivided Family of_______________, I have made a gift of Rs.______ (Rupees ________________ only) as per the following details: By Cheque No.________, dated __________, drawn on Bank ____________________, ________________ Branch, in favour of ________________________ HUF.
2. The above Gift has been duly accepted by ________________________, as Karta of his Hindu Undivided Family and has been duly acknowledged hereunder.
3. This Declaration of Gift is made to record the fact that I have made this Gift in favour of the Donee as above, who now has the absolute right, title and interest in the gifted amount. Date: ___________, 200__
___________________ (Signature of the Donor)
ACKNOWLEDGEMENT OF GIFT I, ________________________, hereby acknowledge having received the above gift made to my Hindu Undivided Family by _________________________. Date: ___________, 200__
___________________ (Signature of the Donee as Karta of his HUF)
27 August 2010
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. 1.6 lakh. HUF will also gain from the tax slab structure of computing income tax. Apart from basic exemption of Rs. 1.6 lakh, section 80C deduction up to Rs.1 lakh is also available.
27 August 2010
I fully agree with Mr.Sanjeev Kumar Goel. HUF is not created by the act of the members or co-parceners and does not depend on documentation. As rightly pointed out by him it is a legal status conferred on hindus naturally and automatically whether they like or not. It is not left to the liking of the individual members. Hence no particular kind of documentation is prescribed for this. What has been suggested by Mr.Vishal is confined purely to tax purposes. I thank Mr.Vishal for his detailed approach to the matter making his answer pregnant with substance,as he does always.