Conditions to form HUF:
There are some essential conditions that must be fulfilled to qualify as an HUF. These are outlined below:
- Only one member or coparcener cannot form an HUF;
- The joint family continues even in the hands of females after the death of the sole male member;
- An HUF need not consist of two male members. One male member is enough.
The person who manages the affairs of the family is known as the karta. Normally, the senior- most member of the family acts as karta. However, a junior male member can also act as karta with the consent of the other members.
Members and coparcenars:
All the members of your family, including your wife, children, their wives and their children. While the male members are called coparceners.
The Hindu Succession (Amendment) Act is to remove gender discriminatory provisions in the Hindu Succession Act, 1956 and gives the following rights to daughters under Section 6:
- The daughter of a coparcener cell by birth become a coparcener in her own right in the same manner as the son;
- The daughter has the same rights in the coparcenary property as she would have had if she had been a son;
- The daughter shall be subject to the same liability in the said coparcenary property as that of a son.
Both the daughter and the father has to be alive on the date of the amendment for the daughter to get the benefit, irrespective of whether she has been married or not on that date. If the father has passed away before the amendment date, then she wouldn’t have been a daughter on the date of the amendment. Hence she cannot claim a share in father’s property.
The difference between a coparcener and a member is that a coparcener can demand partition of an HUF.
Minimum number of coparceners. An HUF can consist of just two members, one of whom is a coparcener. However, for tax purposes, the income of such an entity would not be taxed in the hands of the HUF; it would be taxed in the hands of the sole coparcener.
For an entity to be taxed as an HUF, it should have at least two coparceners. Thus, the income of an HUF consisting of a husband and wife would not be taxed in the hands of the HUF, except in cases where the husband has received funds on the partition of a larger HUF.
Any income that arises on the investment of HUF funds (like interest earned on loans given by an HUF) or on the utilization of HUF assets (like rent earned on letting out HUF property) would be regarded as HUF income. It is important that the income is earned using HUF funds or property only and not of Karta or any member.
Please follow our blog to given below to know more about HUF taxability:https://cleartax.in/s/huf-hindu-undivided-family