Forming a separate Leal entity
One of the essential benefits of forming a HUF is the Hindu Undivided family is considered as a distinct legal entity. Under section 80C, they can claim all the exemptions of the income tax laws separately. But HUFs must obtain a PAN card and Bank account in the name of the HUF.
Another crucial benefit that you after forming a HUF is; A HUF can receive up to INR 50,000 as gifts in the form of cash, Cheque, drafts, and many more. A HUF is free from income tax laws. A Karta of HUF can also gift his daughter in marriage. All these gifts exempt from Income tax.
Forming a HUF in India is easy. HUF comes into existence by Act called HUF Deed. A HUF Deed is a legal document on stamp paper that states the name of the head and other members of HUF.
When you form a HUF, you can have an additional PAN card. This PAN would be legally acceptable everywhere. Thus, you can avail of tax benefits. The new PAN card that you obtain is eligible to pay its Tax individually.
Another significance of forming a HUF is all the members get equivalents rights to the assets of the HUF. Even the new members that add to the HUF through marriage or Birth will receive equivalents rights on the assets. The unborn child in mother’s womb also has equal shares on the property.
Inheritance or Birthright is acceptable in HUFs name. The legal Heir in a HUF will inherit an interest in the legacy of the person making a will. Even his children will also be considered as the legal heirs of the asset inherited.