Hindu Undivided Family (HUF)
Hindu Undivided Family (HUF) consists of all individuals who are lineally descended from a common ancestor and comprises of unmarried daughters. HUF is not formed by a contract but by the status of a family i.e., it is created automatically in any Hindu Family. Having a common ancestor is a pre-requisite to form a HUF. The person who manages the affairs of the family is known as the Karta, and all the other family members are known as Co-parceners.
Advantages of a HUF
- The members are also liable to pay taxes just like other individuals. If the turnover of the business of a member exceeds Rs. 25 lakh or Rs.1 crore then an individual needs to perform tax audit.
- The head of the HUF has all rights to sign the pertinent documents on behalf of other members.
- You can form different taxable units of HUF.
- Any asset or savings made or insurance premium disbursed by the HUF will be subtracted from the net Income for the tax purpose.
- One of the major reason most family forms HUF is because they can create two PAN cards and file taxes separately.
- A woman can be a co-partner in the HUF as her husband is a Karta. So, the additional income earned by the woman cannot be added to this.
- The official stature remains the same if the Karta or the last member of the family is passed.
- Women in the family can gift a property in her name which is owned by her or her family.
- Members of Hindu Undivided Family can easily avail loans.