Thread by @CAYogesh4u

Thread 🧵 Tax Planning through HUF Part 2

In this thread:

How Income generated in HUF
Who can be members of HUF
Who can be Karta in HUF
Investments in HUF
Who owns HUF property
Some questions from Part 1

@Spaysocial @investyadnya @AdeParimal @gaurav28jain

Q. How income generated in HUF?

Income can be generated through any activity such as
Trading Activity
Factory Setup
Run Hospital
Consultancy Business

Efforts to generate income in HUF can be put by all the members.

#HUF

HUF can’t be run in professional capacity where certification required.

For eg. CA, Doctors, Enginneer’s can’t run their practice under HUF but can do consultancy business where there is no certification requirement.

Q. HUF can have Agricultural Income ?

Yes, HUF can earn agricultural income if there is agricultural land under HUF’s name.

If land is not in HUF’s name then also HUF can earn agricultural income if HUF taken agricultural land on Batai /Batidari system.

#Agriculturalincome

Q. Who can be the members of HUF?

ALL family members can become members of HUF. Members include Co Parceners as well as normal members.

Members can be upto 4 Generation’s.

For eg.
Me
My Children’s
My Grand Children’s
My Great Grand Children’s

Interesting !

Q. What’s the difference between Members and Co-Parceners of HUF?

Co-Parcener means who has right to call for the partition of HUF but member can’t demand the partition of HUF.

Co-Parcener is compulsorily member of HUF but,

Member does not necessarily be the Co-Parcener

Member has rights in HUF Property. Can also demand maintenance expenses but can not demand for partition.

Also, there are some small differences but ignoring for now.

That’s one of the reason wife of Karta is not considered as Co-Parcerner of HUF. Wife is treated as simple member of HUF.

Wife also enjoys all the benefits /rights over the property of HUF but can not demand partition of HUF.

Very important!

This also means, children’s whether boy or girl are the co-Parcerners as well as members of the HUF.

Q. What if Karta of HUF Passes away ? Who will be next KARTA?

In general parlance, senior male member will be the Karta of HUF. As it’s a customary law.

Wife of deceased karta can’t be next Karta of HUF. She can guide HUF, it’s business and it’s properties as a Guardian.

Deceased karta’s children (boy or girl) can become Karta after they becomes major. If they are minor when KARTA passes away.

So in other words, only CO-PARCENERS can become KARTA of HUF and not any simple members. Very important again !

Q. Can apart from any senior male member any JUNIOR member can become KARTA?

As per various supreme courts judgments,

If there is CONSENT from other co-parceners, then such Junior male member can become KARTA.

Q. Can FEMALE member can become KARTA?

Yes, with the CONSENT of other Co-Parceners even junior female member who is Co-Parcener can become KARTA of HUF.

Also, as per various court judgements even senior FEMALE member can become KARTA as she is senior co-Parcener.

Q. Who owns property of HUF?

Property or business of HUF is HUF’s property. It’s not any single member’s or KARTA’s property.

It’s widely misunderstood that HUF property belongs to Karta only. It’s not like that.

Karta is just like Manager or CEO of HUF.

Who has decision making powers. But does not have full ownership of HUF property.

If KARTA passes away, property of HUF will belong to HUF only. i.e. of all members. Not only to children’s or wife.

Next generation will continue this property or business as we know HUF will run upto 4 Generation’s. Already discussed above.

Members of family after 4th Generation can not become Co-Parceners, they can become simple members of HUF.

Q. Can HUF can make investments ?

Yes, HUF can do investments like in
✅Shares, Mutual Funds
✅Contribute to member’s PPF account
✅Land,Building,Agricultural Land

In short, majorly all modes available for individuals for investments are available to HUF also.

I hope you have got some more insights on HUF in this thread Part 2

Please retweet for maximum reach 🙏🏻

Also, coming with another thread specifically on general questions of HUF in comments of this thread and from YouTube as well.

Thanks.

Link of video for more understanding: #HUF 👇🏻👇🏻

Part -1 on Tax Planning through HUF

https://twitter.com/CAYogesh4u/status/1559257225218011136