What
is Hindu Undivided Family and how is it taxed?
Interestingly, even Jain, Buddhist
and Sikh families can have HUFs. Here's everything you need to know about HUFs
An HUF is a family which consists of all persons lineally
descended from a common ancestor, and also the wives and daughters of the male
descendants. It consists of the karta, who is typically the eldest person or
head of the family, while other family members are coparceners. The karta manages
the day-to-day affairs of the HUF. Children are coparceners of their father's
HUF. Once a daughter gets married, she becomes a member of her husband's HUF,
while continuing to be a coparcener of her father's HUF. Even Jain, Buddhist
and Sikh families can have HUFs.
Under section 2(31) of the Income-tax Act, 1961, an HUF is
considered a "person" and, therefore, is treated as a separate entity
for the purpose of tax assessment. Often families that own ancestral properties
and businesses obtain a separate Permanent Account Number (PAN) in the name of
the HUF. This is done so that the incomes earned from the assets and businesses
owned by the HUF are assessed separately, which also brings down the family's
tax liability. An HUF is taxed on the same slab rates that are applicable to an
individual income tax assesse.
Happy Investing
Source:Valueresearchonline.com
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