How to shut HUF with the revenue tax division?

Hindu Undivided Family (HUF) was a well-liked method for a lot of households to avoid wasting tax. The income-tax division treats HUF as a separate assessee. Therefore, it may well get all tax deductions out there to people, and its returns could be filed individually.

To be clear, an HUF means a Hindu household, and it comes into existence routinely – it’s not fashioned by way of a authorized course of. There is an choice to file returns for HUF. To do that, the household wants to use for a PAN (everlasting account quantity) with the revenue tax division.

Many households are transferring away from utilizing HUF to avoid wasting tax because the construction will not be as engaging because it was some years again. If you had been submitting income-tax returns for an HUF individually and need to cease it, the method will not be as simple.

An HUF includes of a ‘karta’, who, sometimes, is the eldest male within the household. The sons, daughters and grandchildren are coparceners who’ve an equal proper to the property. An HUF can solely be dissolved after the partition of the property. For this, the household should execute a deed of partition and distribute properties amongst the members (karta and coparceners).

All relations have to be a part of the deed. The deed ought to spell out all of the properties which are a part of the HUF, which relations are dividing amongst themselves. The division of property have to be according to the provisions of the Hindu Succession Act.

The Income-tax Act doesn’t recognise a partial partition dissolution of HUF. Partition means ‘full partition;. For dissolution of the HUF, a household wants to attract up a deed of full partition and get it registered with the signatures of all members. Once the partition of HUF is full, it can stop to exist.

If there is no such thing as a partition, the revenue tax division will proceed to evaluate the entity, and the relations might want to file returns.

Once the partition is over, the relations can write to the assessing officer to give up the PAN.

(Do you’ve gotten private finance queries? Send them to mintmoney@livemint.com and get them answered by trade specialists)

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