Table of Contents
What is a HUF account?
HUF means Hindu Undivided Family. You can save taxes by creating a family unit and pooling in assets to form a HUF. HUF is taxed separately from its members. Buddhists, Jains, and Sikhs can also form a HUF. HUF has its own PAN and files tax returns independent of its members.
What are the disadvantages of HUF?
Disadvantages of the HUF
- No outside members other than family members can be introduced to the HUF.
- While the Karta has all the power he also has the burden of unlimited liability.
- Also, the absolute dominance of the Karta overall business and financial decisions make cause conflict among the HUF.
What are the benefits of HUF account?
The major advantage of creating a Hindu Undivided Family Account is that the family gets an extra PAN Card and can split the family income and thereby resulting in tax saving and reducing the tax outgo. This is the major reason why CA’s advise their clients to create a HUF and save taxes of upto Rs.
What is HUF in simple words?
Hindu Undivided Family (HUF) consists of all persons directly descended from a common ancestor, and also the wives and daughters of the male descendants. The Hindu Undivided Family is treated as a ‘person’ under section 2(31) of the Income-tax Act, 1961, for the purpose of assessment under the Act.
Who can deposit money in HUF account?
(1) If a person has got only high salary income (say 10 to 15 Lacs per annum) and no income from other sources like rent, business etc, how he can deposit money in to his HUF account. Obviously, money he will transfer from his salary account to HUF account will be tax paid money.
Can we withdraw money from HUF account?
“An HUF is used to build assets as members cannot draw money out of it,” said B. However, funding an HUF is tricky. Capital can be brought in only through gift or inheritance subject to gift tax laws, which say that any amount above ₹ 50,000 from non-family members is subject to tax.
Can HUF take professional income?
Hello, Even if you create a HUF, professional income, and the rental income would be taxable in your individuals’ name only. And also a HUF cannot have salary income. Since professional income would depend upon your personal skills & abilities and the rental income would be charged in individuals hands as per sec.
Can Karta withdraw money from HUF bank account?
yes karta can withdraw the money. But the other coparners can obtain court injunction provided that they can substantiate that the karta wants to convert HUF property to his personal property.
Can HUF open saving bank account?
A HUF can open a Bank account in any bank. The types of Bank accounts that can be opened by a HUF are Savings Account, Current Account or Term Deposit Account. In addition to this, it is also possible for HUF to open Accounts relating to borrowings from bank by way of Cash credit, Term Loan or any other types of loan.
Can HUF pay health insurance?
What happens in case of HUF? An HUF can also claim a deduction under section 80D for a health insurance policy taken for any of the members of the HUF. This deduction will be Rs. 25, 000 if the insured member is below 60 years, and the deduction will be Rs.
Who is responsible to pay tax under HUF?
Just like other individuals, even HUF members are liable to pay taxes every year. If the turn over of the business of a HUF member exceeds over Rs. 25 lakhs or Rs. 1 crore, s/he needs to perform tax audit under the guidance of a certified Chartered Accountant as mentioned in the Section 44AB of the Income Tax Act.
What kind of income can be shown in HUF?
The entity is allowed to earn from all legitimate ways except by way of salary. It can engage in business, investing in real estate and market linked investment options such as shares, earn income through rent etc. The HUF should file for ITR (Income Tax Returns) and income earned would be taxed as per the slabs.