How Uniform Civil Code in India will affect HUF tax outgo

Amid information buzz in regard to UCC or Uniform Civil Code in India, numerous tax and funding specialists are busy discovering out how this may affect the revenue tax outgo of incomes people. Prime Minister Narendra Modi not too long ago talked about UCC and stories say it might be tabled within the Monsoon Session of Parliament. Along with different implications, UCC when applied will affect revenue tax legal guidelines and succession plans in India. Probably the most direct affect is prone to be on the Hindu Undivided Household (HUF) and the revenue tax advantages related to it.

What’s UCC?

The Uniform Civil Code in India goals to formulate and implement private legal guidelines of residents which apply to all residents equally no matter their faith, intercourse, gender, and sexual orientation.

What’s HUF?

A HUF is a household which consists of all individuals lineally descended from a typical male ancestor. It consists of the karta, who is usually the eldest individual or head of the household, whereas different relations are coparceners.  Even Jain, Buddhist, and Sikh households can have HUFs.

HUF revenue tax guidelines

A HUF account is similar to a person account. “The HUF as a tax unit is just not of latest origin. This was already there within the Revenue Tax Act, 1922, the predecessor of the current Revenue Tax Act of 1961, beneath which additionally it has been continued,” stated Tax and funding professional Balwant Jain.

Being a separate tax unit, it enjoys a separate tax exemption restrict along with the varied tax breaks beneath Sections like 80 C, 80 D, 80 DDB, 112A, and many others, Jain added.

The revenue tax slab for HUF is similar as that for a person, with an exemption restrict of 2.5 lakh, within the case of the previous tax regime. The HUF additionally qualifies for all of the tax advantages beneath related sections of the Revenue Tax Act and enjoys exemptions with respect to capital beneficial properties. Nonetheless, within the case of the brand new revenue tax regime, the exemption restrict for HUF is 3 lakh.

Impression on HUF after implementation of UCC

If the UCC is in the end applied, the idea of HUF will go. Based on Balwant Jain, this may occasionally want an modification within the Revenue Tax Act if no particular provisions within the UCC on the same line as contained within the “Kerala Joint Hindu Household System (Abolition) Act, 1975″ is made. 

He additional stated that when the legislation comes into impact, no Hindu might be entitled to say any curiosity in ancestral property attributable to his start within the household.

As per Balwant Jain, not solely the provisions in regards to the rights of individuals taking start after coming into power of UCC but in addition provisions in regards to the current joint household should be made both beneath the UCC or beneath the Revenue Tax Legal guidelines. 

If applied, UCC is prone to have an effect on crores of Hindu households. Nonetheless, it stays to be seen whether or not the federal government will put off the idea of the Hindu Undivided Household or not.


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Up to date: 30 Jun 2023, 01:11 PM IST