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Tax Queries: How to continue with HUF PAN after death of the Karta

Every week, an expert selected by ET answers queries from our readers on income tax.

ET CONTRIBUTORS|
Oct 11, 2018, 12.28 PM IST
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Only a coparcener can become the Karta of an HUF.
Dilip Lakhani, Senior Chartered Accountant, answers queries from our readers on income tax and other levies.

My father had a Hindu Undivided Family (HUF) account and a PAN associated with it through which he paid all taxes on our agricultural income and rental income. He was the Karta and my mother and I are the members. After his demise three years ago, we are unsure about how to continue with the HUF PAN and in our case who would be the karta with two surviving female members. As of now we are still paying taxes using the old HUF PAN. Now I am married and have a 3-year old son. Can we open a new HUF account with a new PAN with my mother being Karta and my husband and I being members to club the HUF income and pay taxes through the new account? Can a minor grandson have a role in such an arrangement? Or, can we continue using old PAN? However, we are not allowed to open any new bank accounts using that PAN. How should we manage this? — KALPANA SINGH

Only a coparcener can become Karta of a HUF. By virtue of the Hindu Succession (Amendment) Act 2005, daughters can also become coparceners and have interest by birth in coparcenary property similar to sons. Therefore, you can continue with your father’s HUF and become Karta of the HUF. There is no requirement to form new HUF and obtain new PAN. Your husband and child shall not have any role in your father’s HUF. You may be eligible to operate the same bank account by submitting declaration about change in Karta.

I am an individual having no- agriculture land of 2 acres located at Pune. One developer have given me offer under which he will construct the residential / commercial units and give me 35% of the total area. I am a salaried employee. How much and when should I pay tax when I enter into agreement?

You will not be liable to pay any tax when you enter into an agreement with the developer. As per Section 45(5A) of the Income Tax Act 1961, you will be liable to pay capital gains tax on the receipt of certificate of completion of the project. The Ready Reckoner value of the 35% area allotted to you will be treated as sales consideration. You will be entitled to claim deduction of indexed cost of the land based on the date of purchase. The difference between the sales consideration and indexed cost will be chargeable to capital gains tax.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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