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
By Ashwini Kumar Sharma | Jun 29, 2018
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 assessee.
In arrangement with HT Syndication | MINT