Will govt, Income Tax dept get more tax revenue if HUFs are abolished?

On August 31, the Law Commission of India recommended abolishing the concept of a Hindu Undivided Family to increase tax revenues as part of family law reforms.

The law panel, in its report, says that HUFs are being used for tax evasion. “The special status given to the entity of HUF was only for the purpose of taxation. Now, this status is being used for the evasion of tax only,” it says. 

It relies on the Direct Taxes Enquiry Committee Report of 1971 that said HUFs were being used for tax avoidance. 

In fact, a 1971 paper published in the Economic and Political Weekly titled “An Agenda for Tax Base Reform” estimated revenue losses in 1958-59 to be Rs 1.47 billion and nearly Rs 3 billion that year. 

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