New Delhi, June 30: The Modi government is planning to bring a Uniform Civil Code or UCC. According to reports, a legislation regarding Uniform Civil Code could be tabled in Parliament's monsoon session. Amid the buzz, tax and investment experts have started analysing the potential impact of the UCC on income taxpayers. It is also believed that the UCC, when implemented, may have direct impact on the Hindu Undivided Family (HUF) and the income tax benefits associated with it.

The Modi government wants to implement a Uniform Civil Code to create and enforce personal laws that are equally applicable to all people, regardless of their sexual orientation, gender, or religion. Will the UCC end the HUF as a tax-exempt category? Uniform Civil Code: Parliament Standing Committee's Meeting to Discuss UCC on July 3.

Hindu Undivided Family

A HUF is a group of people who are all directly related to the same male ancestor. It comprises of the karta, who is ordinarily the head of the family or the oldest member, and other family members who are coparceners. HUFs are even permitted for Jain, Buddhist, and Sikh families.

A HUF account is fairly comparable to a personal account. The HUF is a long-established tax unit. This was featured in the Income Tax Act of 1922, which was the forerunner of the current Income Tax Act of 1961, under which it was also continued. Uniform Civil Code: PM Narendra Modi Chairs Meeting With Amit Shah, JP Nadda and Other Senior Ministers in Delhi.

HUF Tax Rules

In addition to the many tax discounts under Sections like 80 C, 80 D, 80 DDB, 112A, etc., it benefits from a distinct tax exemption limit since it is a separate tax unit. With a 2.5 lakh exemption under the previous tax system, the income tax bracket for HUFs is the same as that for individuals. The HUF is also entitled to exemptions from paying capital gains tax and any other tax benefits provided by applicable parts of the Income Tax Act.

UCC's Impact on HUF

The HUF idea might be abandoned if the UCC is finally adopted. It means the HUF might not have a basic tax exemption of Rs 2.5 lakh, which is separate from the individual income of the family members. A Hindu may not be able to claim any interest on ancestral property owing to his birth into the family once the law is in place.

(The above story first appeared on LatestLY on Jun 30, 2023 04:39 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).