08 December 2011
These are the steps to create capital of a HUF.
1- First one should open a bank account with the name of Hindu undivided family like ANKIT HUF with a stamp, ID Proof and the proof of the members of the family of HUF.
2- Next is to apply for PAN (Permanent Account Number) of the income tax.
3- Now transfer money by gifts etc to HUF capital keeping in view the clubbing provisions and tax on gifts under Income tax act, Remember there is no Tax on gifts in kind though they may attract clubbing provisions in some cases.
4- Stranger can gift HUF but nor more than 50000 rupees as per section 56 of income tax act.
5- A Father can gift to his son’s newly created HUF and not for his son but to his family according to 64(2) and 56(2) of the income tax act.
6- HUF funds and the affairs of the HUF are completely differs from one’s own affairs. One can do his/her business/job freely while having the member of HUF. But HUF income and individual income are different and to be taxed differently.