HUF means Hindu Undivided Family. You can save taxes by creating a family unit and pooling in assets to form an HUF. HUF is taxed separately from its members. A Hindu family can come together and form an HUF. Buddhists, Jains, and Sikhs can also form an HUF. HUF has its own PAN and files tax returns independent of its members.
One person cannot form HUF. An HUF is formed by a family.
An HUF is automatically created at the time of marriage.
HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters.
Hindus, Buddhists, Jains and Sikhs can form HUFs.
HUF usually has assets which come as a gift, a will, or ancestral property, or property acquired from the sale of joint family property or property contributed to the common pool by members of HUF.
Once an HUF is formed it must be formally registered in its name. An HUF should have a legal deed. The deed shall contain details of HUF members and the business of the HUF. A PAN number and a bank account should be opened in the name of the HUF.
Why its need to registered Huf ?
An HUF is taxed separately from its members. Therefore, deductions (such as under Section 80) or exemptions allowed under the tax laws can be claimed by it separately. For example, if you and your spouse along with your 2 children decide to create an HUF, all the 4 of you as well as the HUF can claim a deduction for Section 80C. HUF is usually used by families as a means to build assets.
Should a HUF always be a resident of India?
It is not necessary that a HUF must always be a Resident of India. In case the control and management of the HUF is situated outside India, the HUF would be a non-resident Where the affairs of the HUF are managed from outside India the HUF would be a non-resident.
Prepare of HUF Affidavit
Prepare of form 49A pan form
Submission of Pan Application to Income tax department
Payment of Pan Fees