PAN for HUF or a PAN Card for a Hindu Undivided Family is an important document.
An HUF is tax entity which attracts tax benefits under the Income Tax Act and can own assets by itself.
It is used by members if the HUF to reduce tax liability.
Before moving into the aspect of PAN for HUF it is essential to have a brief overview of the HUF concept.
An HUF is essentially a Hindu joint family. HUF consists of those who take birth into such a joint Hindu family. It comes into existence once a person marries another of the opposite sex.
The HUF concept also applies to Buddhist, Jain and Sikh families. It consists of Karta, members and coparceners. Karta is the head of joint family and manages the financial affairs of the HUF.
For instance, the HUF bank account cannot be operated by other members/coparceners except with the approval of the Karta.
Coparceners are male and now, even females (after the Hindu Succession (Amendment) Act, 2005) who are take birth in the joint family.
They have the right to claim partition of the joint family property. The members of the family are those who are married into such a joint family and do not have the right of partition.
HUF has a separate entity, different from its co-parceners and members.
It is treated as a separate “person” under the Income Tax Act.
It enjoys certain tax benefits under the Act, for instance, when a HUF uses its income for paying LIC premium or invests in long term infrastructure bonds it can claim a deduction under the IT Act.
An HUF requires a PAN Card mainly for opening an HUF account with a bank and while applying for tax benefits under the Act.
When an HUF is a separate entity having a PAN of its own, the income from any ancestral property is treated as its income. Hence the members would be subject to lower tax slabs and in this way the family obtains the benefit of possessing an extra PAN card.
An HUF has to file such documents as are filed by the Karta in his capacity as an individual.
For online PAN application the HUF, like any other “person” under the IT Act, has to fill Form 49A. (For information and instructions regarding Form 49A see this link).
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