HUF Registration
It is crucial to understand what HUF stands for before learning about HUF registration. The complete term for HUF is Hindu Undivided Family. Let’s now discuss creating HUF. The Hindu Undivided Family (HUF) is created automatically after marriage and does not need to be established. However, to save tax through HUF, it is essential to register or complete HUF registration. However, not everyone in India is eligible for HUF registration. It is evident from the name that only families belonging to the Hindu religion can benefit from the HUF registration guide. Nonetheless, Jain and Sikh families are also eligible for HUF registration according to the Income Tax Act. The eldest male of the family plays the role of “Karta” in this HUF. All decisions for HUF are made by the Karta. The other family members act as members and coparceners in this HUF.
HUF Registration Process
HUF registration consists of three steps.
1) HUF Deed
The first step for HUF registration is to prepare the HUF deed. It is also called an HUF affidavit.
Stamp paper
A minimum stamp paper of Rs 100 is required for the HUF deed
Date of HUF formation
The date of marriage of the Karta is specified in the HUF deed in place of the date of HUF registration or the date of creation.
Karta
In the HUF Deed, Karta provides a declaration based on the details noted on his Aadhaar card, which includes his name, father’s name, age, and address.
Family members
The HUF deed mentions the name and address of each family member and their relationship with the Karta.
Ancestral property
If the Karta intends to transfer any ancestral property to the HUF, it will also be stated in the HUF deed. Earnings from the property are seen as a significant factor for HUF registration.
Share of family members
If the property is being transferred to a HUF, then the shares of the family members in that property will also be specified in the HUF deed.
Business activity
It is not mandatory to mention the purpose of HUF registration and the business activity in the HUF deed.
Terms & conditions
While certain terms and conditions may be included in the HUF deed, their determination will be made by the Karta and other family members.
Notarization
Once the HUF deed is prepared, the Karta signs it and gets it notarized. In this manner, the HUF deed is created for the purpose of HUF registration.
2) HUF PAN card
The second step for HUF registration is to apply for the HUF PAN card.
Income Tax
A PAN card is required for HUF registration under Section 2(31) of the Income Tax Act, 1961.
PAN Application
The application for a HUF PAN card is made using Form 49A (Application for allotment of PAN).
Online or offline
The application for an HUF PAN card can be made either online or offline. You can submit your online application via either the Protean portal or the UTITSL portal. If you want to apply offline, then you can visit the local authorized PAN center.
AO Code
In the HUF PAN card application, first of all, the details of the Income Tax Assessing Officer (AO Code) have to be filled in. This includes the area code, AO type, range code, and AO number.
Name of HUF
Instead of the complete name on the PAN card application, the name of the HUF for which the PAN card is being requested is provided. For instance, if Karta’s name is Amit Kumar, the application will be submitted under the name Amit Kumar HUF.
Address
The entire management of the HUF is done by the Karta; hence, the address mentioned on the Aadhar card of the Karta is entered in the HUF PAN Card application form.
Email id & mobile no.
It is mandatory to provide an email ID and a mobile number for communication by the department regarding the HUF PAN card application.
Sources of income
The main reason for HUF registration is to save tax under the income tax slab by creating a separate PAN. Therefore, the sources of income of the HUF also have to be mentioned in the HUF PAN card application. This includes income from business/profession, income from house property, capital gains, income from other sources, and no income. The Karta has the option to decide according to his preference.
Document as a proof
The applicant can attach the PAN and Aadhaar card of the Karta as proof of identity, address, and date of birth for the HUF PAN card.
Final Submission
Upon providing all the necessary details and paying the required fee, the application is submitted for the HUF PAN Card.
Acknowledgment
A 15-digit acknowledgment number is issued after the successful submission of the HUF PAN (Permanent Account Number) card application.
Document Courier
Ultimately, the signed HUF PAN card application, a self-attested copy of the PAN and Aadhaar of the Karta, along with a copy of the HUF deed, is sent via courier to Pune (Income Tax PAN Service Unit).
Allotment of HUF PAN card
If the department approves the information provided by you, the HUF PAN card will be issued within five business days.
3) HUF Bank Account
The third step for HUF registration is to open a bank account for HUF.
Selecting a Bank
Once the HUF deed and HUF PAN card are created, the Karta can establish a bank account for the HUF at any nearby branch.
Required Documents
The bank requires the following documents to open an HUF account: –
– HUF PAN Card
– HUF Deed or Affidavit
– Karta’s PAN and Aadhaar Card
– Karta’s passport-sized photo
– Email Id and mobile no.
– A/C opening cheque from Karta’s account
Trading Account
HUF can open a trading account to generate income, as numerous platforms exist for conducting transactions in the stock market.
Friends, these were the three steps to follow for completing HUF registration.
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