Wednesday, February 19, 2014
Huf Tax Implications
In this context, Hindu mean all the persons who are Hindus by religion. Section 2 of the Hindu Succession Act, 1956, elaborately declares that it applies to any person, who is a Hindu by religion and it includes a Virashaiva, a Lingayat or a follower of Brahmo, Prathana or Arya Samaj, a Buddist, Jain or Sikh. In CWT In the case of Smt. Champa Kumari Singh (1972) 83 ITR 720, Supreme Court held that the HUF includes Jain Undivided Family. HUF is a separate entity for taxation under the provisions of sec. 2(31) of the I. T. Act. It means that the one person can be assessed as an individual and also as a Karta / Chief of his family.
HUF Formation An HUF is automatically constituted with the marriage of a person. No formal action is required to create an HUF. The HUF being the result of birth, possession of joint property is only an appendage of the HUF and is not necessary for its constitution. So, one person cannot form an HUF. Family is a group of people related by blood or marriage. However, the property held by a single co-parcener does not lose its character of Joint Family property solely for the reason that there is no other male or female member at a particular point of time. Once the co-parcener marries, an HUF comes into existence as he alongwith his wife constitutes a Joint Hindu Family. This was held in the case of Prem Kumar v. CIT, 121 ITR 347 (All.)
It can be noted that, the technical status of an HUF continues even in the hands of females after the death of sole male member. Even after the death of the sole male member, the original property of the HUF remains in the hands of the widows of the members of the family and the same need not divided amongst them.
An HUF need not consist of two male members- even one male member is enough. The understanding that there must be at least two male members to form an HUF as a taxable entity is not applicable. Gauli Buddanna v. CIT, 60 ITR 347 (SC); C. Krishna Prasad v. CIT 97 ITR 493 (SC) and Surjit Lal Chhabda v. CIT, 101 ITR 776 (SC). A father and his unmarried daughters can also form an HUF. CIT v. Harshavadan Mangladas, 194 ITR 136 (Guj.)
Nucleus of HUF With several rulings it is now established that, nucleus or ancestral joint family property is not required for the existence of the HUF.
Karta - He is the person who manages the affairs of the family. Generally, the senior most male member of the family acts as Karta. However, any other male member can also act as Karta with the consent of the other member. Narendrakumar J. Modi v. Seth Govindram Sugar Mills 57 ITR 510 (SC).
Property - The HUF property may consist of ancestral property, property allotted on partition, property acquired with the aid of joint family property, separate property of a co-parcener blended with or thrown into a common family pool. The provisions of sec. 64 (2) of the Income Tax Act, 1961 have superseded the principles of Hindu Law, in a case where a co-parcener impresses his property with the character of joint family property.
Female members cannot merge her separate property with joint family property, but she can make a gift of it to the HUF. Pushpadevi v. CIT 109 ITR 730 (SC). Female members can also bequeath their property to the HUF, CIT v. G.D. Mukim, 118 ITR 930 (P & H).
Multiple Family Structures - An HUF can consist of several branches or sub-branches. For example, a person with his wife and sons constitutes an HUF. If the sons have wives and children, they also constitute smaller HUFs. If the grandsons also have wives and children, then they also constitute HUFs. It is irrelevant whether the smaller HUFs hold any property. Nucleus property can be acquired by partition of bigger HUF or by gifts from any member of the family or even by a stranger or by will with intention of the donor or the testator that the said gift or bequest will form the HUF property of the donee. An HUF can be composed of a large number of branch families, each of the branch itself being an HUF and so also the sub-branches of more branches. CIT v. M.M.Khanna 49 ITR 232 (Bom).
Tax planning through HUF -
(i) Increase the number of assessable units through the device of partition of the HUF.
(ii) Create separate taxable units of HUF through will in favour of HUF or gift to HUF.
(iii) Enter into family settlement / arrangement.
(iv) Payment of remuneration to the Karta and also to other members.
(v) Providing loans to the members of the HUF.
(vi) Gift to members.
Partition of HUF - The tax liability can be reduced by partition of the HUF. This can be easily done in a case where the partition results in separate independent taxable units. Suppose an HUF consists of father and two sons and there are two business establishments, a house property and other sources of income with the HUF. If the members of the HUF have no other sources of income then partition of the HUF can be done by giving one business establishment to each of the sons, house property to the father and dividing the other sources in such a manner so as to make the partition equitable. Such a partition of HUF will reduce the tax liability considerably. The position may, however, be different in a case where the members of the HUF have got high individual incomes. In such a case it is not advisable to break or partition the HUF. The HUF should be allowed to continue as a separate taxable unit.
In case, where the HUF has only one business establishment, which can not be physically divided, it may be converted into a partnership firm or a company. At present, rate of firms tax and the rate of tax in case of a company, is 30% flat, theore conversion of HUF business into a partnership or a company is not advantageous. The incidence of, in such a case, can be better reduced by payment of remuneration to the members of the HUF. Partial partition of HUF is also a very effective device for reducing its tax liability. Partial partition is recognized under the Hindu Law. However partial partition of an HUF is no more recognised by the Income Tax Act. The provisions of sec. 171 partial partitions can still be used as a device for tax planning in certain cases. An HUF not hitherto assessed as undivided family can still be subjected to partial partition because it is recognized under the Hindu Law and such partial partition does not require recognition u/s. 171 of the Income Tax Act, 1961. Thus a bigger HUF already assessed as such, can be partitioned into smaller HUFs and such smaller HUFs may further be partitioned partially before being assessed as HUFs. Besides any HUF not yet assessed to tax can be partitioned partially and thereafter assessed to tax.
Legal aspects and partition of HUF
(i) Assets distribution in the course of partition would not attract any capital gains tax.
(ii) No gift tax liability.
(iii) No clubbing of incomes u/s. 64.
Create Separate Taxable Units - It is now well settled law that there can be a gift or will for the benefit of a Joint Hindu Family .It is immaterial whether the giver is male or female, whether he or she is a member of the family or an outsider. What matters is the intention of the donor that the property given is for the benefit of the family as a whole. Suppose there is an HUF consisting of Karta, his wife, his two sons, daughter-in-law and grand children. A gift or will can be made for the benefit of the two smaller HUFs of the sons. The bigger HUF will continue as a separate taxable unit even after the death of the Karta. There may also be a case where the father or mother has self acquired properties. They have a son and his family but there is no ancestral property as a corpus of their family. Then, father & mother or both can leave their property for the benefit of their sons family, through their respective wills.
Family Settlement / Arrangement - Family settlements / arrangements are also effective devices for the distribution of ancestral property. The object of the family settlement should be broadly to settle existing or future disputes regarding property, amongst the members of the family. The consideration for a family settlement is the expectation that such settlement will result in establishing or ensuring amity and goodwill amongst the members of the family. Since family arrangement does not involve transfer, it would not attract gift tax, capital gains tax or clubbing. By a family arrangement tax incidence is considerably reduced or it may even be nil. Suppose a family consists of Karta, his wife, two sons and their wives and children and its income is Rs. 6, 00,000/-. The tax burden on the family will be quite heavy. If by family arrangement, income yielding property is settled on the Karta, his wife, his two sons and two daughter-in-law, then the income of each one of them would be Rs.100,000/- which would attract no tax & if the assessment year is 2007-08, then the tax liability would be reduced form Rs. 100,000/- to nil.
Remuneration to the Karta & members - The other important measure of tax planning for an HUF is to pay remuneration to the Karta and its members for the services rendered by them to the family business. The remuneration so paid would be allowed as a deduction from the income of the HUF and thereby tax liability of the HUF would be reduced, provided the remuneration is reasonable. The payment must be for service to the family for commercial or business expediency. Jitmal Bhuramal v. CIT 44 ITR 887(SC).
Loan to the Members - If the business, capital or investment of the HUF is expanding then such expansion can be done in the individual names of the members of HUF by giving loans to the members from the HUF. The HUF may or may not charge interest on the loans given. Where after partition of an HUF, two members became partners in three firms on behalf of their respective HUFs and they also became partners in a fourth firm, the funds were obtained by means of loans from other three firms, the share incomes of the members from the fourth firm was assessable as their individual income only. CIT v. Champaklal Dalsukhbhai, 81 ITR 293 (Bom.).
Gift of Assets to Members - Generally, the Karta of an HUF cannot gift or alienate HUF property but he can make certain gifts to the female members. Gift of immovable property within reasonable limits, can also be made by a Karta to his wife, daughter, daughter-in-law or even to a son out of natural love and affection. Gift of immovable property within reasonable limits can be made only for dutiful purpose e.g. marriage of a daughter etc.
If the HUF has surplus funds or property, then, the Karta can make gift of movable assets to his wife, daughter or daughter-in-law at one go or over a period of time. However, it may be noted that with effect from 1.10.98, the applicability of Gift Tax is no more in force. Theore, no Gift Tax will be payable by a person making the gift from on or after 1.10.98. However, w.e.f. 1.10.2004 Gift received from other than relatives exceeds Rs.25,000/- then that amount is liable to Income Tax u/s. 57. It may be remembered that gift for marriage or maintenance of daughter is not liable to Gift Tax. Further clubbing provisions of sec. 64 would not be applicable if the gift in validly made in accordance with the rules of Hindu Law. Besides, if a gift made to the minor daughter of the Karta is valid then the provisions of sec. 60 of the Income Tax Act would not be attracted. CIT v. G. N. Rao, 173 ITR 593 (AP). Whereby, section 60 relates to transfer of income where there is no transfer of assets.
Other Tax Planning
(i) Transfer of individual property to the family.
(ii) Family reunion after partition.
(iii) Inheritance by succession
Partnership Firm & HUF - An HUF cannot become a partner in a firm. The Karta or a member of the HUF can represent the HUF in a firm. A female member can also represent HUF in a partnership firm, CIT v. Banaik Industries 119 ITR 282 (Pat.). Where remuneration was received by a member of HUF from a firm, where he was partner on behalf of HUF for managing firms business such remuneration was his individual income, CIT v. G. V. Dhakappa 72 ITR 192 (SC); Premnath v. CIT 78 ITR 319 (SC). However, income received by a member of HUF from a firm or company is taxable as the income of the HUF, if it is earned detriment to or with the aid of family funds, otherwise it is taxable as the separate income of the member, P.N. Krishna v. CIT 73 ITR 539 (SC). Members of HUF can constitute Partnership without affecting a partition or without disturbing the status of joint family. Ratanchand Darbarilal v. CIT 15 ITR 720 (SC). However, on viewing at the present rate of firms tax, conversion of HUF business into partnership is not advantageous.
The Author, CA A. K. Jain, can be contacted at, 21, Skipper House, 9, Pusa Road, New Delhi 110005, Mobile No. 98-100-46108, E-Mail:
Bad Credit Student Loans Learn How to Qualify
The cost of getting an education in this country is going up with each passing semester. Tuition is skyrocketing and books are out-of-this-world expensive. But tuition and books are only the beginning of the list of expenses that todays college student has.
When you factor in housing, food, clothing, computer equipment, lab fees, and general living expenses, the student aid package or scholarship that you received may not be enough to adequately provide for you during the course of the school year. You may have taken out student loans, such as the Stafford loan or Perkins loan, but have found that you need even more cash. That is where the private student loan comes in.
But for those with bad or poor credit, receiving a private student loan may seem like a far-off dream. On the contrary, there are lending agencies that specialize in providing loans to student borrowers with less-than-perfect credit files. This type of loan is known as the bad credit student loan, and you might qualify.
Money For Living Expenses
A bad credit student loan is designed to take up where traditional funding falls flat. Bad credit student loans can be used for any expenses you might have during college that you can not meet with your financial aid award, scholarships, or government-guaranteed loans.
The application for the bad credit student loan will ask you for general information about your studies and anticipated graduation date. It is important to borrow only what you need. Your loan servicer can help you decide how much to ask for if you are unsure.
Co-Signer Improves Chances of Approval
Some bad credit student loan lenders will ask for co-signer to apply with you on the loan application. The co-signer does not have to be a parent; a friend, relative, or other person who trusts you to repay can be your co-signer. The co-signer is basically agreeing to pay your loan should you default on repayment after graduation.
You can borrow amounts ranging from $500 up to several thousand per semester. You may chose to have your payments split up over the school year, or get your money in one lump sum.
Online Lenders = Big Savings
There are many fine online lending institutions that offer bad credit student loans. The application is completed online via the Internet, and the money can either be deposited electronically into your checking account or mailed in a paper check to your address.
You can also track and manage your bad credit student loan online, which means you will have easy access to account information at your fingertips. Because online bad credit student loan lenders have lots of competition, the rates and interest that they charge to service your loan may be significantly less than those that you might pay at a traditional bank - without the discerning eye of the stiff banker or loan officer.
This kind of loan offers the student an opportunity to get additional funding so that they can continue their education without the worry of having enough money for living expenses. This enables the student to concentrate more fully on their education - which can lead to a better experience during college.
Recession at 3 5 in Q2 the greater situation right now
Initially, when the government published its budget in year-end 2009, it had forecasts for around the same GDP. Then it revised it to -2% and then to -4% with the IMF+EU memorandum. It may go higher than that still.
Ordinary people are struggling with their daily expenses, taxes, reduced business etc. A lot of cars are left parked while people dont have money for gasoline. Big taxes have hit a rate of diminished returns and government income projection is failing due to over-taxation and recession. People simply cant give what they dont have.
Expenses are higher, taxes are higher, consumption is lowered and many small businesses are forced to shut down. It is anticipated that over 100.000 small businesses will shut down in 2010 (!).
In the absence of large-scale industry, the backbone of Greek businesses has traditionally been small-scale businesses, usually family owned. It seems theres something like a greater plan of extinction where all autonomous businessmen will have to become beggars of jobs, instead of job-givers. In a sense, the whole market is shaping its parameters in such a way that, given enough time on the same course, people will all gradually turn employees of big multinational companies - which will own all and everything. It may sound like an exaggeration but at this point most products on grocery shops for example, are currently produced by ex-Greek companies that have been bought by foreign capital. Greek shipping lines are partly owned by foreign capital. Telecommunications, transport etc, foreign capital too. Even banks are being encouraged to do mergers with foreign banks so as to shift their ownership.
The long term implication is that by sending all profit from commercial transactions abroad, the country will be engaged in an ever increasing downward spiral of povertization.
In the meanwhile the media heavily under-report the rate of economic suicides that has taken the form of a "plague". A 32 year old man committed suicide the other day for not having 120 euros to pay his mortgage (!). What is happening is really tragic, in this regard.
Tuesday, February 18, 2014
Business Trip on Short Notice
In different travel situation, the further in advance you may choose to prepare your trip, a lot more youll perform on your business hotels. You dont want to have to flounder around about how can one arrange a flight and places to stay when the business venture looms suddenly and pronto. Short notice business trips breakout endemic of selected producers and job descriptions so if you know youll go utilizing this drill frequently, you can make some plans much in advance in order that you have a checklist of precisely accidents whenever you discover you must be at your spot practically instantly.
First of the, in a short look at travel scenario, economy involves a second priority. Your employer knows that whenever you book complete fare with an airline to get to your own location inside specific time, the bigger costs are unavoidable. Make sure that organization travel policy has there are many conditions to put avoid journey spending budget limits in such a situation.
The part of the on-going journey where have got the least "wiggle room" tend to be airline accommodations. Of mini seminar, you can use the enormous internet search tools much the same way Travelocity or Orbitz. Over-all, those are great locations to to find exactly what airlines will be needing plane tickets at your distinct times. But once wish an airline, operating with the airlines aid directly will show you essentially the most options they are able to offer as well sometimes provide you in the better fares, even using a short notice. Make sure to look into the travel details caully returning to dont find yourself living through long stop overs who will risk the constrained timetable among the many business meetings when you begin attend. As appropriate, spend the money on nonstop flights make sure that the company target of the trip indications of agenda.
Do your homework about hotel accommodations shortly. If you will find likely locations you will asked to visit prompt, you can do your research on the nearest hotels to business site in order that you reduce trips once prehaps you are there. By your target resorts saved and also telephone numbers on mention, you can quickly phone and put up your accommodations during first minutes. However if you realize your better selections the actual market hotels are booked on whenever you want to will be at your site, give them a inquire with anyhow. The great hotel are likely call around with other hotels in the community and find you a place as near to your residence as possible. They could help you save several hours of aggravation locating a substitute room.
Rental cars are often a great deal a difficulty. Its smart to call ahead and have a reservation but short for a major convention or special event around, there are plenty of several car rental agencies to be able to any vehicle to book that you might want dont start your search prior to being on the ground within reach destination town.
You can make additional preparations for the potential risk of a short notice business trip like having your own toiletries and affects you constantly travel with packed and able to go out the techniques. Through your travel clothes at the ready, you are able of all practically walk home and walk out within minutes for a brief notice business trip as you are that well prepared.
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What Happens If I Do Not Repay My Payday Loan
Among a plethora of questions that borrowers ask before deciding to secure a payday loan, the most common question borrowers wonder about is, "What happens if I do not pay back my loan?" It must be said that most borrowers are indeed able to pay back their loans without issue, but the fact remains that there is a good number of borrowers who cannot repay their loan(s) on time. Millions of people get payday loans, whether through a store or through a website, and while they provide the benefit of instant cash for whatever financial situation you may find yourself in, certain obligations must be met. The most IMPORTANT obligation is to repay the loan at the end of its term.
Borrowers have numerous concerns in regards to this issue, so Ill address them in order of importance. First, there is the issue as to whether a borrower can be sued over an unpaid loan. In most cases, this will never happen, as most consumers usually borrow a small amount (often less than $500), and this is not an amount to sue over. What almost always happens is that lenders are aggressive in collecting the amount, using collection agencies or their own department to collect their money. There absolutely is a code of conduct that lenders and collection agencies must follow; it is called the Fair Debt Collection Practices Act and it states, in essence, that collectors cannot be overly intimidating in their collecting practices.
Another issue borrowers who cannot repay their loan(s) on time face is that of additional fees being tacked on for not repaying their loan(s). Upon securing a payday loan, borrowers hand over a check to their lender to use as collateral - if a loan is not repaid voluntarily by the borrower, lenders will deposit the check and withdraw the loan amount, and if there are insufficient funds in the borrowers account to cover the loan, not only will the borrower have to pay the bounced check fees, but also late payment fees from the lender. You are still bound by the terms of the loan and the law to repay the loan, and lenders will always point that out to you.
Third, the issue of lenders reporting to the major credit bureaus is of concern to borrowers, as obviously, a non-payment is a negative mark on your credit report. Most, not all, payday lenders rain from reporting to the major credit bureaus, instead opting to report a customer to a non-traditional credit bureau such as Teletrack. Non-traditional bureaus assess the risk of lending money to a customer, and if a customer has been reported to one for failure to repay a loan, it will be very hard for that customer to secure another payday loan from that lender or any lender.
Regardless of the circumstances, one never wants to be in a situation where he/she cannot repay his/her loan. Always make sure you will have sufficient funds to repay the loan when you receive your next paycheck, as it is not worth the grief to put off repayment. Conversely, you want to make sure you are dealing with a reputable lender, such as a payday loan store or a website like PayAdvanceLending, to make sure your loan has fair terms and repayment can be made without issue.
Finding an Ontario Bankruptcy Trustee You Can Trust
Meeting with an Ontario bankruptcy trustee will help you to understand just what can be done to improve your financial situation. It is a good idea to ask around to friends and family and find out who they have found that is reputable and that have helped someone that they know. If you do not wish to discuss it with your friends or family, check out the internet. You are sure to find a trustee that you will feel comfortable with.
Being comfortable with your bankruptcy trustee is important because you will need to discuss some personal information with them in regards to your finances. You can obtain a free initial consultation with most trustees so that you can see just how comfortable you feel with them. If, once you have the initial meeting, you feel good about your choice it is time to get started on reclaiming your financial life.
They are not there to judge. They are there simply to help you get back on the right track. It is very likely that they have dealt with many people that were in a much worse situation than you are.
Your bankruptcy trustee will help you understand the different types of bankruptcy and which option would be best based on your personal situation. They will evaluate your income versus your expenses and will take a look at any outstanding credit card debt or other debts that you have. Once they have completed a full evaluation they will make their recommendation as to how to proceed.
Once you have decided on the Ontario bankruptcy trustee that you would like to do business with, it is time to be completely honest with him or her. They will need to know your exact financial position at the time that you meet so they can make the best possible option available to you. It will not do you any good if you hide information that may be embarrassing or shameful from them. Remember, when you put your trust in them, they will do everything possible to help you out of the situation that you are in.
When the bankruptcy trustee brings you their suggestions on how you should proceed, remember, they are not out to get you. They are there to help. The suggestion may be one that you have not considered in the past but if they feel it is the best option then you should take the time to hear what they have to say and to weigh out your options. The relief that comes with the end of harassment from creditors is amazing and the bankruptcy trustee is there to make it happen for you.
Ease out Your Financial Anxiety using the Help of Debt Settlement Applications!
The financial burden being a great stress, most people try to get out of their debt by seeking the support of debt settlement firms. One cannot rest assured of the relief unless and until he locates one of the best performing companies offering good deals.
The must come out of debts forces a person to approach a debt settlement firm. The strength of fake organizations is more than that of genuine ones and so it has turn into really a job to stumble upon a reputable one which could ease out monetary tension. Obtaining the company very profitable, a lot of has entered into the industry claiming to assistance you, but however all will not be genuine. Due to this explanation, many buyers place their faith in fraud businesses and land themselves in far more troubles.
So what ought to you do ahead of picking a settlement firm?
You need to make a research as detailed as possible and gather information from reliable sources. The more one tries to understand the procedures involved in the settlement program, the better his selection will be. It is worth taking a solid time to entrust your burden to an expert and legal company.
The World Wide Web comes to your aid by listing the settlement firms. It is possible to pay a visit to the forums to undergo the reviews of buyers of those settlement businesses. By acquiring registered with these forums, you can also post your queries and doubts concerning a specific loan settlement firm and its function and wait for responses from knowledgeable men and women. The web sites of settlement firms also offer you access to chat with them and you may make a selection soon after you have a detailed talk with them. However, your discretion needs to come to your aid in making a smart decision relating to the selection on the settlement organization to help you recover your debts. Nevertheless, you might have to become convinced concerning the reliability in the firm by checking its license, verifying its past performances and so on. There are many cost-free services provided by debt relief network to locate the companies in a particular area. The solutions in the Chamber of Commerce are extremely useful for all those who browse for reliable settlement companies. The firms which have registered with Better Enterprise Bureau and Chamber of Commerce would be the most reliable ones and so might be advisable for financial relief.
While browsing on your own makes you wiser regarding these programs and the benefits and disadvantages therein, there is another way to select the settlement company. Consultation with a financial expert can direct you in a proper way so that you are relieved of your financial burden. This method can be highly recommended as you do not have to worry about the result here.
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