HUF Tax Entity and Income - Doubts

[rjeshnani]

Recognition of HUF

• Can an HUF be formally recognised (for PAN and tax purposes) if it currently consists only of me and my wife, with no children?
• Will a separate PAN be issued in this case, and will it be considered for taxation separately?

Income of HUF

• I am a salaried individual and consult with companies as a freelancer. Can this freelance income be charged by the HUF and serve as HUF income which does not get clubbed with my income?

 

[Ra.One]

Your wife will be a 'member', not co-parcener. A child would be required for creation of HUF.

 

[ManInTheSuit]

You can probably open a company and get paid in that as a freelancer.

 

[rushin]

You can open an HUF account with just you and your wife.
You will get a separate PAN for it and can use it to open bank and demat accounts as needed.

However, if you don't have kids, it will be taxes at your (the karta's) rate of tax. If there are kids added as co-parcener then it will be taxed as a different entity and you can get tax breaks.

 

[Ra.One]

You can open an HUF account with just you and your wife.
You will get a separate PAN for it and can use it to open bank and demat accounts as needed.

However, if you don't have kids, it will be taxes at your (the karta's) rate of tax. If there are kids added as co-parcener then it will be taxed as a different entity and you can get tax breaks.

Nahin bhai,
kid required for HUF, self and wife se HUF nahin ban sakta.
Karta and 2 coparceners required- Self as Karta and coparcener, kid as second coparcener. Wife will only be a member, not coparcener.

 

[rushin]

Nahin bhai,
kid required for HUF, self and wife se HUF nahin ban sakta.
Karta and 2 coparceners required- Self as Karta and coparcener, kid as second coparcener. Wife will only be a member, not coparcener.

You can search online, you will find enough references w.r.t. what I mentioned.
The HUF can be formed with just husband-wife but when there is no other co-parcener, it will be taxed as Karta's income tax. It will be taxed seperately only when at least an additional co-parcener (child) is added to the HUF.

Note: I have my own HUF with my wife and no kids since many years, so I am also speaking from my own experience 😅

 

[rjeshnani]

So, if my HUF and PAN is created today and my kid is added in let's say 3 years.

Does additional documentation need to be done? Or will HUF be taxed separately from that financial year?