Bureau News / News Desk
A Hindu Undivided Family (‘HUF’) is formed under Section 2(31) of the Income Tax Act, 1961. The primary goal of establishing this is to minimize or evade income tax.
For someone who truly understands its advantages, it is undoubtedly a gift from the Income Tax Department. An average individual consistently desires to minimize the tax they owe on their earnings. That’s the reason he is thinking about establishing a HUF (Hindu Undivided Family).
The documents listed below are necessary for establishing a HUF;
1. PAN & latest downloaded Aadhaar card of the Karta
2. PAN card of the Karta’s wife
3. Name of Children (if any)
4. Date of marriage
5. E-mail id & mobile no.
6. Legal HUF deed/affidavit on stamp paper & notarization
Many ideas related to HUF (Hindu Undivided Family) can be found on social media, in articles, and on YouTube, which taxpayers choose to try to complete the HUF formation process themselves. However, lack of proper information can sometimes lead to problems. To ensure that the HUF formation process is conducted properly and efficiently, we recommend that you seek the assistance of a knowledgeable and experienced tax consultant.
We wish to notify you that E-Tax World is the leading tax consultancy firm in India that executes the most HUF formation processes annually. Furthermore, you can reach E-Tax World by call/WhatsApp/e-mail from any village, town, city, or state in India, which will carry out the HUF formation process for you from home within just 6 working days. E-Tax World not only prepares the HUF deed/affidavit but also arranges for its notarization on stamp paper, allowing the Karta to avoid going to the market for this process. Consequently, acquiring your HUF PAN card and notarized HUF deed/affidavit on stamp paper is simple and can be done from the convenience of your home without any trouble. In addition to this, we provide appropriate guidance regarding opening of bank account and establish a corpus.
2. Tax-free gifts/corpus from Karta and coparceners in a HUF: –
Once the HUF formation process is finalized, the PAN card and HUF deed/affidavit are obtained, which facilitate the opening of a bank account at a nearby branch. After opening the bank account, the biggest question that arises is how to transfer funds to the HUF account?
According to Section 56(2)(x) of the Income Tax Act, money deposited into the HUF bank account and transfer the property in the name of HUF by the Karta and HUF members (as stated in the HUF deed/affidavit) is regarded as tax-exempt.
Type of Property: –
(i) Immovable Residential & Commercial Property,
(ii) Stocks and financial instruments,
(iii) Jewelry,
(iv) Collections of archaeological artifacts,
(v) Illustrations,
(vi) Artworks,
(vii) Statues,
(viii) Any piece of artwork,
(ix) Precious metal
Transfer Immovable Property via Gift deed: –
A HUF (Hindu Undivided Family) cannot earn income (Rent/capital gain) from immovable property until it has been transferred/registered into its name.
Property can be conveyed through a gift deed by creating a deed, having it signed by the donor (coparceners of the ‘HUF’), Karta (behalf of the ‘HUF’), and two witnesses, and registering the deed at the sub-registrar’s office. This procedure transfers ownership legally right away and without any payment to the donor, rendering the gift voluntary.
Procedures for transferring property through a gift deed step-by-step: –
Prepare the gift deed: Generate a legal document that consists of the names and information of the donor (the coparceners) and donee (the HUF), a clear description of the property, and an affirmation that the transfer is voluntary and without compensation.
Assemble essential documents: Accumulate all needed paperwork, including evidence of the donor’s ownership, identity, and address verification for both parties and witnesses, as well as an encumbrance certificate.
Pay stamp tax: Settle the stamp tax applicable according to the property’s worth as mandated by circle rate/state laws.
Carry out the document: The donor (the coparceners) and donee (the HUF) are required to sign the gift deed while two witnesses are present.
File the deed: Present the deed for registration at the nearby sub-registrar’s office. The registration requires the presence of both the donor (the coparceners) and donee(the HUF).
Confirm and accept the document: The sub-registrar will check the document and the identities of the involved parties. After registration, acquire a certified duplicate of the gift deed, serving as legal evidence of the ownership transfer to the HUF.
Expenses incurred in transferring property through gift deed: –
Stamp Duty: ₹5,000
Registration Charge: 1% of the value of property as per circle rate
Processing fee: ₹1,000
Extra Charge: Advocate fee
We believe this article will help you with HUF formation and receiving tax-free gifts/corpus/property from Karta and coparceners in HUF.
Author: Honey Jain
(Founder of E-Tax World)
https://etaxworld.in/
Contact No. +91-9958869427
