HINDU UNDIVIDED

GROUP 1:
FAMILY
A. RAJINI
ANJALI
ANJU
BUSHRA
HARSHITHA
KEERTHANA
POOJA
PRAGATI
SADHVI
SWETHA
 INTRODUCTION
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.An HUF consists of the ‘karta’, who is typically the oldest person or head of
the family, while other family members are coparceners.

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
FEATURES ●
●
FORMATION
LIABILITY

OF HUF
● CONTROL
● CONTINUITY
● MINORITY
 ● The Karta has absolute power and takes
all decisions by himself, it will lead to
effective management.

Advantages of ● Just like a company, the existence of a

HUF is perpetual.

HUF The coparceners do not have any effective

●

control over the management of the HUF,

and all power lies with the Karta.
● An adopted child can also become a
member of HUF family.
● The head of the HUF has all rights to sign
the pertinent documents on behalf of
other members
 ● Restrictions on members: outside
members cannot be part of HUF.
Disadvantages of ● Limited funds: HUF has only
limited capital to run the business,
HUF
and can not expand its business.
● Karta is the absolute decision
maker.
● Karta may not be qualified enough
to carry on the business.
Computation of total income of huf
Step 1: The Gross Total Income of a HUF, like any other individual, shall be computed
under the four heads of income, with their residential status as the basis. There can be no
income under ‘income from salaries’ in the case of a Hindu Undivided Family.

Step 2: Section 60 to 63 relating to the income of other individuals included in the

assessee’s total income are applicable in the case of a HUF. However, Section 64 is not
relevant to HUF as it is relevant in the case of the individual assessee only.
Step 3: Set-off of losses is permissible while aggregating the income under different heads
of income.

Step 4: Carry forward and set-off of losses of the past years, if allowed, is permissible.

Step 5: The income calculated in Steps 1 to 4 is known as

the Gross Total Income from which the following deductions under Sections 80C to 80U
will be allowed.

Step 6: The remaining income after allowing the mentioned deductions is known as the
Total Income.

Step 7: Calculate the tax on such total income at the prescribed rates of tax.

Step 8: Allow the rebate under Section 88E.

Step 9: Add surcharge at 10% on total income exceeding INR 50 lakhs and up to INR 1 crore and 15% of
such income-tax in case of a person having a total income exceeding INR 1 crore.

Step 10: The balance is the total of the tax that is payable which will be raised by a surcharge on such
income tax if applicable.

Step 11: Education Cess at 2 per cent with additional Secondary and Higher Education Cess at 1 per cent on
the tax plus a surcharge if any shall be levied.

Step 12: Deduct the TDS, advance tax paid for the relevant assessment year.
PARTITION OF HUF
● Division of property, where share of each member is determined by making
physical Division.
● Partition can be claimed only by coparcener.

Assessment after Partition

● Income of joint family is assessed as income of a HUF.
● Income of family of 1st date of previous year till partition date us assessed as
Income of HUF
Total / partial partition
Total partition:
Entire joint family is divided amongst all coparcener

Partial partition:
Partial as regards the persons and the properties belonging to the family.
•Documents required for opening HUF account:-
•HUF will have a unique PAN card; this PAN card along with the PAN of Karta
should be produced.
•A declaration form will be provided where every member has to make a signature
stating the name of Karta and declare
•They are the only members of HUF
•Karta to have sole authority over HUF account
•Every transaction on behalf of HUF account, made by each member of the family
is governed by Karta.
•Residential proof of Karta
•Identification proof of Karta
•Apart from the points mentioned above there can be other documents or
conditions depending on the bank where HUF account is opened.
• Tax benefits on a HUF account
• Since the account is equivalent to an individual’s account there are
various tax benefits and a few of them are mentioned below.

• 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. A father who
owns a HUF account can gift a property or money of higher worth to a
son who owns a smaller HUF account; but he should specify that the
gift is for the son’s HUF and not to him as an individual. Under section
64(2) and 56(2) tax benefits can be enjoyed in such instance.
• Corpus can be used for investment in tax free money instruments.
RESIDENTIAL STATUS OF HUF U/S 6(2)
● Resident - HUF will be a resident in a PY when control and management of its affairs
is wholly situated outside India.
● Non- Resident - When control and management is outside India
● Not-ordinary Resident- a)not a resident 9 out of 10 PPY
b) not in India for 730 days or more during 7 PPY.
MiNIMUM ALTERNATE TAX
● Shall apply only if the adjusted total income of HUF exceeds Rs. 20 Lakhs
● Regular income as per IT Act provisions or Tax at 18.5% of Total Income whichever
is Higher
● Health and Education cess at 4% and surcharge if any
● Surcharge is when Adjusted Total Income does not exceed Rs. 50,00,000 then it is nil
● Rs. 50,00,000 to 1 crore it is 10%
● if it exceeds Rs. 1 crore it is 15%
DEDUCTIONS U/S 80 C TO 80 U
● The aggregate amt. of Deductions u/s 80 C to 80 U cannot exceed GTI
● No deductions to be claimed from capital gains.
Deduction under section 80G

● Deduction U/s 80g is available to all Assesses.

● Under this section deduction is available for donations made by the assessee to
approved funds and charitable institutions
Donation does not qualify Under Section 80 G

● Donation to an individual.
● Donation in kind.
● Donation paid in excess of Rs:10000 in cash.
● Donation to Institutions, funds, organisation not approved by commissions of income
tax.
● Donation to political party
● Donation made for the benefit of particular community, religion etc.,
Approved donation
● Group 1

1. Jawaharlal Nehru Memorial Fund

2. Indira Gandhi Memorial Trust
3. Rajiv Gandhi Foundation
4. Prime Minister drought relief fund

● Maximum limit is not applicable

● 50 % of the donation charged
Group 2
● National children fund
● National Defence Fund
● Prime Minister national relief fund
● Central welfare Fund to Army/ Air force
● Donation toApproved university or Educational Institute of national Eminence.

National /Central/ state level

Maximum limit is not applicable
100 % of the Donation is charged
Group 3
● Approved charitable institution
● Town planning housing accommodation
● Promoting the interest of minority community
● Notify the temples Church Gurudwaras mosques
● Approved educational institution not of national eminence
● Family planning

● Maximum limit is applied

● 10% of adjusted GTI or total donation under group 3 whichever is higher
Thank you…