Karta of father's huf after the death of huf

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 January 2015 Dear Sir,

I want to know that if a person have its father's HUF named M/s ABC HUF and the HUF have four members i.e. Father himself, his wife & two sons.
After the death of Father, Mother & one Son,

Can another son continue the same HUF in the name of M/s ABC HUF?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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27 January 2015 yes it can be continued and need to alter the deed.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

27 January 2015 What types of changes has to be done in the deed?

& If that HUF had deposits in Capital Gain Account Scheme which was claimed earlier as exemption from Long Term Capital Gain, Can Still, after the death of Former Karta, Provisions of Section 54 will applicable? like still the provision for purchase of property within three years will be applicable?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2024 After the death of the Karta of a Hindu Undivided Family (HUF), there are specific rules and procedures to follow for the continuation of the HUF and handling of assets and liabilities. Here’s a detailed explanation addressing your queries:

### **Continuation of the HUF**

1. **Continuity of the HUF**:
- The HUF can continue even after the death of the Karta. The remaining members of the HUF, including the surviving spouse and sons, can continue to manage and operate the HUF.
- The surviving son can indeed become the new Karta of the HUF. The role of Karta typically passes to the eldest male member, but this can vary depending on family customs and decisions.

2. **Changes in the Deed**:
- **Update the Deed**: The HUF deed should be updated to reflect the changes in the Karta and the members of the HUF. This may involve amending the deed to mention the new Karta and any changes in the composition of the HUF.
- **Legal Formalities**: Ensure that the amended deed is properly executed and recorded if necessary. It’s also advisable to inform the Income Tax Department and update the HUF’s PAN details if required.

### **Capital Gain Account Scheme (CGAS) and Section 54 Provisions**

1. **Capital Gain Account Scheme (CGAS)**:
- **Validity of Claims**: If the HUF had deposits in the CGAS for claiming exemption under Section 54 of the Income Tax Act, the provisions of Section 54 will still apply even after the death of the Karta. The HUF can continue to utilize the CGAS funds for the purpose they were intended for, such as purchasing or constructing a property within the stipulated time frame.

2. **Provisions of Section 54**:
- **Time Frame**: Section 54 allows exemption on long-term capital gains if the funds are utilized for purchasing or constructing a new property within a specified time frame (generally within three years from the date of transfer of the original asset).
- **Continuity**: The death of the Karta does not alter the timelines or the applicability of the provisions under Section 54, as long as the HUF continues to exist and the conditions for claiming exemption are met.

### **Action Steps**

1. **Update the HUF Deed**: Revise the HUF deed to reflect the new Karta and any changes in the family structure.
2. **Inform Authorities**: Notify the Income Tax Department about the changes in the Karta and update any necessary records.
3. **Utilize CGAS Funds**: Ensure that the funds in the CGAS are used in accordance with Section 54 to maintain the exemption status.
4. **Consult a Tax Professional**: For detailed guidance, especially on legal and tax matters, consulting a tax advisor or legal expert is recommended.

By following these guidelines, you can ensure the smooth continuation of the HUF and compliance with tax provisions related to capital gains.

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