Can a father and son both run their own Hindu Undivided Families (HUFs) for tax purposes? Today's Ask Wallet Wise query decodes whether the Income Tax Act allows multiple HUFs across generations if key legal conditions are met.
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My father has an HUF and filing his ITR. Can I, his son who is a coparcener in my father’s HUF also have a HUF of my own simultaneously. Can my father and me both have HUF status under the Income Tax Act simultaneously? Can we file our HUF ITR separately? Is it allowed?
Expert's Advice: An HUF consists of person descending from a common male ancestor upto four generation including the male ancestor. While being member of the HUF of the male ancestors one male member who is also a coparcener can have his own HUF.
So one person can be a member of his own HUF while being member of HUF of his father, grandfather and great grandfather. So there are no restrictions on you having your own HUF while being member of your father’s HUF.
In order for you to have your own HUF, there need to be minimum of `two coparceners in your family. So you can have your own HUF provided you have at least one child in your family.
Under the Hindu law even a husband and wife can constitute a family but under the income tax law there must be minimum of two coparceners as it is based on coparcenary.
From an income tax perspective, the law recognises an HUF as a separate taxable entity, distinct from its individual members. This means father’s HUF and own HUF, if validly constituted, can each have their own PAN, bank account and file separate HUF income tax returns.
It is also important to note that merely declaring an HUF is not sufficient. There must be HUF property or income, such as ancestral property, gifts received by the HUF, or income generated from HUF assets.
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