However, the aspirational objectives of "equal status to all citizens", "promoting gender parity", "national integration" and "reforming existing personal laws" should not jeopardise existing benefits to citizens. The tax benefits granted to the Hindu Undivided Family (HUF) under the present tax regime is one such crucial perk that faces the sword of Damocles with UCC's "uniformity endeavour".
For generations, India has had a "joint family system" where the patriarch or the head of the family remains the unquestioned authority. The aim is "general family welfare" or promotion of the family as a unit for which individual interests of family members can be sacrificed. HUF represents this "joint family system", which was legally. recognised in the 19th century and received the status of a distinct "tax entity" in the Income Tax Act of 1922. Its incorporation as a separate tax unit was intended to govern a family that stays together under a common roof, sharing food and place of worship, and running a family business with different family members as a single unit.
HUF can exclusively encompass all the persons, descendants of a common ancestor including their wives and "unmarried daughters", with the head of the family being Karta (typically eldest coparcener), who is responsible for the family's financial and legal affairs. Although not defined in the Income Tax Act, 1961, HUF is treated as a "person" under section 2(31) of the Act, for the purpose of "tax assessment". HUF's income may be assessed for income tax if the following two conditions are satisfied (i) there is a coparcener; (ii), a "joint family property" is available to the family whether as a business or gift, in a will, as ancestral property, or if it's a property acquired from the "joint family" -funds. The condition is also satisfied if the "joint family" property is sold, or is contributed to the "common pool" by any member.
This story is from the August 2023 edition of BANKING FINANCE.
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This story is from the August 2023 edition of BANKING FINANCE.
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