HUF – Joint Hindu Undivided Family Business is a distinct type of organisation which is unique to India. Hindu Undivided Families are the form of organizations has separate legal entity for the purpose of tax assessment. As the name suggests, an HUF is a family of Hindus. However, even Buddhists, Jains and Sikhs are regarded as Hindus, and can, therefore, set up HUFs. The concept of an HUF has basically evolved from ancient Hindu law. The HUFs have been defined under the Hindu law as a family, which consists of male lineally descended from a common ancestor and included their wives and unmarried daughters.
The relation of HUFs arises from the status not from legal contracts. Creating HUFs are the best possible way for an assessee to save taxes. The registration of Joint Hindu Undivided Family is recommended as it helps in protection against infringement; The process of Joint Hindu Undivided Family is mention in below Where explaining the documentation and process of creation of HUF. We are specialist in the Joint Hindu Undivided Family registration.
Procedure to be followed for starting HUF:
Creating HUF is the best way to save taxes by an assessee. Forming an HUF does not involve huge legal or procedural formalities to be followed. Formation of HUF is no more a cumbersome process for any individual. Forming HUF can help you save taxes to an extent.
|Select a suitable name, Capital||Form a Deed||Apply for PAN||Apply for Bank Account|
|For an HUF to be created the major requirements is the capital and persons. Capital can be in the form of ancestral property, assets gifted by relatives and friends, or received by the HUF through a will. The HUF to be created should have proper name. The members can choose a suitable name before starting a HUF business form.||Formation of HUF should be embodied in a deed which provides that a proper legal deed or agreement is required before creating a HUF. The agreement should be between the Karta & other family members. The agreement need not always be in writing. The agreement / deed should have all the details, including the name of Karta, co-parceners, address & source of funds in the corpus.||After executing the deed, the Karta is required to obtain a permanent account number (PAN) for the HUF. Obtaining PAN is a mandatory requirement as all financial transactions shall carry PAN. The minimum no. of members required is two who can be a husband and wife. Both the spouse can create a family and constitute a HUF.||After that, the Karta is required to open a Bank a/c in the name of the HUF. The HUF is now ready to function. The Karta will have to invest in tax saving instruments and file tax returns on behalf of the HUF. Only the money related to the business of HUF shall be invested in such Bank accounts.|