Are you wondering what is all about HUF Pan Card? If yes, then you have visited the correct place. In this article, we are going to cover maximum information about the HUF Pan Card. It is suggested to read this article till the end.
Firstly, let’s discuss what is a HUF?
The full form of the HUF PAN CARD is the Hindu Undivided Family PAN CARD. An individual can save taxes by creating a unit of family and pooling assets to form a HUF. Taxes are paid separately by the members of HUF. A Hindu family comes together and forms a HUF. Not only Hindus, but Buddhists, Jains, and Sikhs community can also form a HUF. HUF has its own PAN (Permanent Account Number) and can file tax returns independent of its members.
HUF PAN CARD
HUF PAN CARD- As we know a Pan Card is a very necessary document for Hindu Undivided Families (HUFs) as it establishes the HUF as a financial institution that can open bank accounts, buy property and make investments along other things. In this article, we will learn how an HUF can apply for a Pan Card, open a bank account easily, the taxation benefits available to HUF in very simple steps.
How to get HUF Pan Card?
How to get HUF Pan Card? As discussed earlier, a HUF is a separate entity like a company or partnership. A HUF can separately apply for a Pan Card all by itself. You can apply for an HUF Pan card through the website of NSDL as given application link . Without a permanent account number (PAN) card, a HUF would not be able to do anything of what it is set up to do that is to enter into financial transactions easily.
Let’s see the details for HUF Pan Card Application
Details for HUF Pan Card Application
Here are a few details regarding HUF PAN Card
- The name of the HUF (or the name of the head of the family known as Karta [patriarch of the family], which is followed by HUF)
- HUF’s address and residence proof
- Copy of Karta’s aadhar card;
- Copy of Karta’s voter ID;
- Copy of Karta’s driver’s licence or passport;
- Copy of Karta’s ration card;
- Source of income to the corpus;
- Names, father’s name and addresses of all the coparceners of the HUF, with affidavit made by the Karta
- Signature of the Karta after the completion of the Form 49A.
If all the documents are placed correctly in order, then the Pan Card would arrive in 21 days after submission.
How to open HUF bank account
The HUF can open a bank account after the arrival of the PAN card. Here is a list of documents needed to open a bank account for HUFs.
- The name of the HUF
- Photograph of the Karta
- Proof of address as well as proof of identity of the Karta
- Pan card and pan number of the HUF
- The list of coparceners and members
- A declaration by the Karta mentions the members and coparceners that are authorized to operate the bank account.
- Be ready with further details as demanded by the bank, at the time of the opening of the account
The bank account will be in the name of the HUF and the Karta. The members who are authorised by the Karta may operate it. An HUF bank account comes under current account which would yield higher charges from the bank.
HUF eligibility and Deed Creation
- Hindu Only: As per the law, in addition to Hindus, the Sikh, Jain or Buddhist families are also included in HUF.
- Creating a Corpus: it is first set up by forming a corpus. Any kind of asset transferred to a will or ancestral property or any gift from a relative or friend can be used to create a corpus. The moment you establish the corpus, the deed for HUF can be created.
- Stamping the Deed: A deed is a type of stamp paper document holding the names of the Karta, coparceners, and members. The deed should also include the address, bank details and the sources of income from where the corpus will be funded. A declaration by the Karta mentioning all the coparceners and members authorised to perform financial transactions is also needed to be attached to the deed.
Who can be included in an HUF?
You were briefed on HUF Pan Card. Now consider who can be included in HUF.
- An HUF is created by a joint family. For example, a father and his two sons. Both the sons are married and doing the same business together. Anyone by birth is included in the family and is part of HUF.
- A husband and a wife can also form an HUF. They can get taxation benefits and share the income earned from collective and ancestral properties. The eldest male member is known as the Karta, basically, he is the head of the family and has the authority to operate the accounts and other assets details under the HUF.
- The members of a family who are included in HUF are:
Sons and daughters (married and unmarried)
Husbands and wives
Grandsons and great- grandsons
- Both the sons and daughters are termed as coparceners (according to the Hindu Succession Act, now all the daughters are classified as coparceners) and have equal right to become the next Karta, in case if the present one dies.
- Any person after the birth or marriage will become a part of the HUF. However, only the coparceners have the right to succeed the Karta. Members do not have this opportunity or right.
Taxation benefits available to HUF
An HUF which is a separate entity is taxed separately from its members and coparceners. The deductions and exemptions under Section 80 can be claimed by the HUF as well, lowering the individual tax liability. Similarly, refunds can be sought on loans taken, rend paid and the other expenses.
This is the reason most accountants normally advice all Hindu Married Couple to form a group of HUF. It is important to know that HUFs end up paying 30% less tax than others.
So, the first step for Hindu Married couples is to apply for a HUF Pan Card. It is describe above in very simple steps. Let’s take a brief look of the information in the form of FAQs.
1. Who are known as the Karta and coparceners of an HUF?
The head member of an HUF is called the Karta. Mostly, it is the senior- most male member of the family. All the members of Karta’s family automatically become the members of an HUF. The male members are known as the coparceners whereas females are known as the members. The basic difference between coparceners and members is that any of the coparcener can ask for partition of the HUF. In most parts of the country, female members do not owe this right.
2. Can a female be HUF karta?
Until January 2016, a female could not be HUF karta. But in landmark cases, the Delhi High Court came in favour of a female being the Karta of a HUF. The same has not been incorporated in the Income Tax Act yet.
3. What if the eldest male member of a family is an NRI?
If the control and management of happens wholly or partly in India, an HUF is considered to be a resident of India. The residential status of the family will not change as non- residential because the Karta is non- residential unless the decisions concerning the family are made outside India.
I hope this article cleared some of your queries related to the HUF Pan Card. If you have any trouble, feel free to ask in the comment section.