How to Cease the Existence of HUF in Eyes of the I-T Department?

Process of HUF Closing with the Income Tax Department

As per Income Tax Laws, Hindu Undivided Family is a separate assessee and its returns are filed separately. A few years back, registering as HUF (if feasible legally) and paying tax as a HUF assessee was an attractive way to save the tax. But now it is not as alluring for tax saving as it used to be in the past.

Few Takeaways About Hindu Undivided Family

First and foremost, HUF comes into existence automatically; so it is not formed through a legal process though registration is required
To file income tax for HUF, it is necessary to apply for a Permanent Account Number with the income tax department.
How many families are detaching from the concept of the HUF as the tax regime is not as attractive as it used to be.
However, if you were filing income tax returns as a HUF assessee in the past and want to cease it, the task is complicated and it is not simple.

What is a Hindu Undivided Family?

A HUF comprises the ‘Karta’, usually the eldest male member in the family. Although sons, daughters and grandchildren are coparceners; however, they have an equal right to the property.

How Can it Be Dissolved?

A HUF can only be dissolved only after the division or partition of the property. So for the dissolution of HUF, the HUF family must form a deed of partition and distribute the aforesaid properties amongst the members (the Karta and the coparceners).

All the family members must be a part of the deed. The deed needs to have a specification of all the properties that are part of the HUF which the family members shall divide amongst themselves. The division of the assets must align with the provisions of the Hindu Succession Act.

However, as per the income tax act, there is no partial partition of HUF. Partition means full partition. Coming to the dissolution of the HUF, a family needs to have a deed of full partition (not partial) and it should be registered with the signature of all members. Once the partition is completed, HUF shall cease to exist.

However, If there is no partition, the income tax department shall continue to assess the entity, and the family members shall have to file returns.

Alternatively, if the partition is over, the family members then can write and refer to the assessing officer to surrender the Permanent Account Number of the Hindu Undivided Family.

Comments

Check Summary of 2023 MCA Amnesty Scheme for LLP e-Forms

The discussion shall take place for "Latest Amnesty Scheme introduced by MCA in relation to Limited Liability Partnership". A General Circular No 08/2023 Dated: 23rd August 2023- Subject- Condonation of Delay in filing of Form-3, Form 4, Form 11 u/s 68 of LLP Act, 2008 is been issued by the MCA. MCA has acknowledged that they've received numerous complaints regarding technical glitches on their website and discrepancies in the master data. These issues have prevented Limited Liability Partnerships (LLPs) from submitting the LLP-3, LLP-4, and LLP-11. In order to facilitate a more business-friendly environment, the MCA is utilizing its authority under Section 67 of the LLP Act, 2008. They have decided to grant a one-time relaxation in additional fees and any related penalties for delayed filing of the aforementioned three forms, as elaborated in this article. However, one aspect of this initiative raises some confusion. Why hasn't the MCA included Form LLP 8 in this a

All Special Features of Gen I-T Software with Downloading Steps

Gen IT is one of the income tax software created by professionals from SAG Infotech Pvt. Ltd. This software helps to compute Income Tax, Interest Calculations, Advance and Self Assessment Tax. The software is created with high quality-perfection to prepare returns. It also provides e-filing to upload returns with the help of the software. This software is proficient in calculating Income Tax, Advance, Interest Calculations, and Self Assessment Tax. The quality of the software is very high as the returns are prepared by it. The software provides the facility to file and upload returns. Also, there are simple steps to download the free download Gen IT software for the trial version. To complete the processes, the Gen Income Tax returns filing software has 2 different sections which include - Client Manager, Income Tax, Billing, AIR, Calculator, Backup/Restore, Password and Printer Settings, Bulk SMS/E-Mail and Help. These operations are explained briefly below- 1. Client Mana

All About Advance Tax Payment Rule Under IT Act, 1961

A tax expert answers the question- ‘the requirements of advance tax provisions under the Income-tax Act 1961’. Advance tax, as the name itself indicates that the tax paid by individuals in the financial year when the corresponding income is earned, rather than in the assessment year when the income is assessed for taxation purposes. This payment is calculated based on the consolidated income earned and expected to be earned from various sources, such as salary, rent, interest, and more. It takes into account applicable deductions, exemptions, and credits for taxes deducted at source (TDS) or taxes collected at source (TCS). According to section 208 of the Income Tax Act, 1961, individuals whose estimated tax liability for the year amounts to Rs. 10,000 or more are required to pay advance tax. However, senior citizens aged 60 years or above who are residents and do not earn any income from business or profession are exempt from paying advance tax. Typically, advance tax payments are ma

SAG Infotech: Need Tax Software (Call 0141-4072000)

Search This Blog