Table of Contents
What is the concept of separate legal entity?
The Doctrine of Separate Legal Entity is a concept which makes a company a “Legal person”. It makes the company a different Legal person from its owner. It states that the owner and the company are two different Legal entities and they can be made liable Separately for the offence.
Why Hindu undivided family is created?
The primary reason behind building a HUF is to get an additional PAN card which would be legally acceptable, as well as to avail the tax benefit. After building the HUF, the members falling under HUF will not have to pay tax individually. The HUF can then start using the new PAN card to file the ITR.
Why company is a separate legal entity?
A company is a “Separate Legal Entity” having its own identity distinct from its members. As a legal entity, a company can own a property in its own name, can sue and be sued in its own name and also enjoys perpetual succession, among others.
Is Hindu undivided family a company?
The Joint Hindu Family Business or the Hindu Undivided Family (HUF) is a unique type of business entity. It is governed and dictated by the Hindu Law, which is one of the several religious laws prevalent in India. The head of such a Joint Family Business is the eldest member of the family, the “Karta”.
Is HUF a separate legal entity?
HUF is a separate entity for the purpose of assessment under the Act. Under Hindu Law, an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. An HUF cannot be created under a contract, it is created automatically in a Hindu Family.
How is HUF beneficial?
Tax benefits on a HUF account According to IT act, tax rebates and deductions can be availed under sections 80C for HUF account. Gifts collected up to a worth of Rs 50,000 will be tax free. Corpus can be used for investment in tax free money instruments.
Why is separate legal personality important?
So this separate legal entity concept can be applied to obtain advantages in a number of different ways: to insulate the directors and owners of a single company from liability. in larger businesses, to separate out new projects and joint ventures in special purpose vehicles.
Can HUF provide professional services?
An HUF can run a business through its karta. Then, why a doctor or CA or an advocate is not allowed to give its professional services on behalf of HUF.
What is HUF and its benefits?
By forming a Hindu Undivided Family, you can optimise your tax liabilities and also include your family members to benefit in the future. For the sake of income tax, the HUF is considered as a separate entity and is therefore taxed separately.
Can HUF give loan to its members?
From an income tax perspective, there is no restriction on giving gifts to members of the HUF and receiving interest-free loans from the HUF or the members of the HUF. Further, there should not be any tax implications in the hands of the HUF in providing gifts to individual members.
What are the effects of separate legal entity?
As seen, the most practical effect of the separate legal personality is that a company can enter into legal relationships on its own name, not its members.
Can HUF conduct business?
A Proprietorship concern is not governed by any specific law as such and therefore, there is no bar on HUF becoming a Proprietor of any concern or firm. In such a case it is advisable to make a declaration of the members as to carrying on business as its Proprietor.
Is HUF a legal entity under the law?
In the Legal regime, HUF is considered to be a separate legal entity distinct from its members. The members of HUF have their separate PAN card and HUF has its own PAN card and hence HUF can start and run its own business and generate profit.
What is Hindu Undivided Family (HUF) under Income Tax Act?
Under Section 2 (31) of the Income Tax Act, 1961 Hindu Undivided Family (HUF) is treated as a person and is taxed separately from its members. HUF includes all persons that are lineally descended from a common ancestor and will include their wives and their unmarried daughters. Two conditions must be satisfied to be assessed under the head of HUF:
Is income received by members from HUF taxable?
Whether the income received by members from HUF is taxable? As per Section 10 (2) of the Income-tax Act, 1961, any sum received by an individual from Hindu Undivided Family of which he is member is exempt from tax.
Can a HUF be a proprietor of more than one business concern?
HUF can be a Proprietor of one or more than one Business concerns. Separate name can be kept of HUF business entity. No tax Audit of HUF business if Turnover within Rs. Business Income Computation @ 8\% without books of account in case turnover is upto Rs.
https://www.youtube.com/watch?v=w2VQ3IFNbrQ