How to close HUF with the income tax department?
Hindu Undivided Family (HUF) was a popular way for many families to save tax. The income-tax department treats HUF as a separate assessee. Therefore, it can get all tax deductions available to individuals, and its returns can be filed separately. To be clear, an HUF means a Hindu family, and it comes into existence automatically  its not formed through a legal process. There is an option to file returns for HUF. To do this, the family needs to apply for a PAN (permanent account number) with the income tax department. Many families are moving away from using HUF to save tax as the structure is not as attractive as it was some years back. If you were filing income-tax returns for an HUF separately and want to stop it, the process is not as straightforward. An HUF comprises of a karta, who, typically, is the eldest male in the family. The sons, daughters and grandchildren are coparceners who have an equal right to the property. An HUF can only be dissolved after the partition of the property. For this, the family must execute a deed of partition and distribute properties amongst the members (karta and coparceners). All family members must be part of the deed. The deed should spell out all the properties that are part of the HUF, which family members are dividing among themselves. The division of assets must be in line with the provisions of the Hindu Succession Act. The Income-tax Act does not recognise a partial partition dissolution of HUF. Partition means full partition;. For dissolution of the HUF, a family needs to draw up a deed of full partition and get it registered with the signatures of all members. Once the partition of HUF is complete, it will cease to exist. If there is no partition, the income tax department will continue to assess the entity, and the family members will need to file returns. Once the partition is over, the family members can write to the assessing officer to surrender the PAN. Send them to mintmoney@livemint.com and get them answered by industry experts)  Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.