Page 21 - PR Communication Age January 2016
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HUFS ARE TAXED AS
SEPARATE ENTITIES
O ver the past few months, we HUF account and other assets can also into contracts, or form a partner or
received investor queries be transferred to the HUF. form a partnership firm, or represent
about how one can put in the family except through the Karta.
place a Hindu Undivided Who can give a gift to an HUF? On his part, the Karta may allow
Family (HUF) structure, various legal others to represent the HUF, can gift
aspects and operational issues related to Gifts can be received from members, assets of HUF to family, but all those
the same. Tariq Aboobaker, who relatives who are non-members and should be within reasonable limits. The
specializes in succession planning by also from strangers up to a certain Karta can alienate the joint family
individuals, families, etc, answers some limit. property with the consent of the
of those queries. coparceners and if all the coparceners
Who can withdraw from a HUF are adult, the alienation is binding on
How is an HUF formed? and for what purpose? the entire joint family.
An HUF is a legal expression, which has The Karta controls and becomes the What is the status of a HUF
been employed in taxation laws as a custodian of the finances of the HUF. after the death of the Karta?
separate taxable entity. An HUF can He can borrow money for and on
comprise large, small or nuclear behalf of HUF and can also spend On the death of the Karta, the HUF can
families. money for the family and is not continue with the next senior male
accountable for it. member taking over as the Karta.
Although only one member or
coparcener cannot form an HUF, the What is the role of Karta? Can a family property be part
property held by a single coparcener of HUF after death of parents?
does not lose its character of joint Usually, the senior most male member
family property solely for the reason of the family is Karta in a HUF, even if he Yes, that is possible.
that there is no other male or female is aged or incapacitated. In case the
member at the time. Once the senior most member is not the Karta, How are investments done
coparcener marries, a HUF comes into then the next senior male member takes under a HUF structure?
existence as he along with his wife over as Karta. However, a junior male
constitutes a joint Hindu family. member can also act as the Karta with Investments by a HUF are made by the
the consent of the other members. The Karta either in his own name or in the
Who can give seed money? Karta can claim remuneration and other name of the HUF. The HUF as an entity
benefits from the HUF. cannot invest in government's small
After creation of a HUF, an application savings schemes, such as PPF, NSC,
for an income tax PAN is made and The Karta manages the affairs of HUF, monthly income schemes, recurring
subsequently an HUF account is controls and becomes the custodian of deposits and other time deposits. A
created. The coparceners and the finances, can borrow money for HUF account cannot be opened with
members, including the Karta (the and on behalf of HUF, spend money for joint holders and no nominee can be
person who manages the affairs of the the family, can make partition of the appointed for a HUF account. (Source:
family), can transfer money into the family. However, a HUF cannot enter TOI)
PR COMMUNICATION AGE January 2016 21
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