Question
Explain Joint Hindu Family/ Firm (HUFs).

Answer

Joint Hindu family or Hindu Undivided Family Business is a unique form of business organisation prevailing only in India.
  1. The HUFs have been defined under the Hindu law "As a family, which consists of male lineally descended from a common ancestor and included their wives and unmarried daughters."
  2. It is governed by Hindu law and represents a form which is owned managed and controlled by the male members of a Joint Hindu Family.
  3. Creating HUFs are the best possible way for an assessee to save taxes.
  4. There are two conditions for existence of HUFs Minimum two members must be there in the family and existence of some ancestral property.

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Similar questions

Swati and Divya are professional fashion designers and are friends also. Swati lives in Calcutta whereas Divya lives in a village in Bihar.The young girls of the village used to get their clothes stitched as per the prevailing fashion from the near-by town. This gave Divya an idea to start a boutique in the village. She discussed about it with Swati who was already running a Boutique in Calcutta and earning good profits. Swati guided Divya for setting the boutique. Before starting the boutique, Divya trained young girls of her village who knew stitching. Not only this, she called the women of her village who were sitting idle at their homes to help the young girls in cutting, hamming, putting buttons and other small related activities. All the women of the village were happy as they started earning and were economically helping their families. Divya also started earning good profits. The goodwill of Swati was also increasing because of her good work and customer satisfaction. For earning more profits she opened four new boutiques in the near - by areas. The teams who were managing these boutiques were not efficient. Many customers complained about the quality of stitching and the material used for designing etc. Swati was very busy and could not control the activities of the new boutiques. It also damaged the image of the old boutique and resulted into declining of her profit. After few months her business failed, and she had to shut-down all the boutiques.
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