AJITH REDDY D

Has the time come, “To abolish the concept of Hindu Undivided Family in BBA-LLB,
Indian law”? SECTION C
2016-1560

In a Consultation paper published by the Law Commission of India in August 2018 about

potential reforms in the Indian Family Law; the Law commission proposed to abolish the

concept of coparcenary which is the fundamental unit of a Hindu Undivided Family (HUF).

By doing so the Law commission aims to do away with the institution of HUF for good. They

argued using various enquiries by multiple committees both during pre and post-Independence

about:

 How the HUFs would cost a huge loss of revenue to the government exchequer

(Income Tax Enquiry Report, 1936)

 Anomalies in the taxation of HUFs (The Taxation Enquiry Commission, 1953 – 1954)

 Large number of families using HUFs as a mere Tax-Avoiding tool (Direct Taxes

Enquiry Committee Report, 1971)

But nothing has been done about this by the Legislature due to various political reasons

such as hurting the sentiments of the majority Hindu community, pre-existing reform Bills

about the Hindu personal law in the parliament and so on. The Law commission concluded by

saying that, “The institution of HUF was a so-called gift ‘by the British when they could not

comprehend the complex socio-economic structure of the Indian families. However, today,

when it has been seventy-two years since independence, it is high time that it is understood that

justifying this institution on the ground of deep-rooted sentiments at the cost of the country’s

revenues may not be judicious.”1 This ignited a huge debate in the society whether to abolish

the concept of coparcenary or not. Therefore, Let’s look into the arguments of both the sides

and conclude which would a better way forward.

1
Law Commission of India, Consultation Paper on Reform of Family Law, 31 August 2018
Page 1|4
 AJITH REDDY D
Has the time come, “To abolish the concept of Hindu Undivided Family in BBA-LLB,
Indian law”? SECTION C
2016-1560

Arguments against Abolishing of HUFs:

 The Law commission’s paper uses studies which were conducted many decades from

today. Therefore, one cannot rely on such old studies to take a decision this important.2

 Due to a substantial increase in the number of nuclear families in the recent past, the

idea of HUFs is becoming highly unpopular in more and more families especially in

the younger generation due to various formalities and complexities involved.3

 The tax benefits are very minimal with comparison to the efforts involved in keeping a

track of expenses, income and maintaining proper books of accounts. Hence, abolishing

the institutions would not lead to a huge difference in the tax revenues of the

government.4

Arguments for Abolishing of HUFs:

It is true that the Law commission is relying on very old studies to prove its point, there are

also recent studies which come to the same conclusion. WRT the other two arguments

forwarded by the people advocating HUFs, the following statistics prove them wrong.

 Though many sociological studies say that there has been an increase in the number of

nuclear families, it need not necessarily mean that the concept of coparcenary is losing

prominence because as per statistics of the Income Tax department, the number of

HUFs are rising every year. The number of HUFs raised from 8,40,720 in 2012-13 to

9,40,061 in 2014-15 and almost more than 10,00,000 HUFs filing for tax returns in the

2
Are suggestions to abolish Hindu Undivided Family (HUF) justified?
Available at: https://www.livemint.com/Opinion/ZiTYjc8K3wB4ehwEEYD0CK/Are-suggestions-to-abolish-HUFs-
justified.html
3
Ibid 2
4
Ibid 2
Page 2|4
 AJITH REDDY D
Has the time come, “To abolish the concept of Hindu Undivided Family in BBA-LLB,
Indian law”? SECTION C
2016-1560

present time5. From this it can be concluded that more and more families are opting to

save tax by setting up HUFs as the setting up of HUFs is very easy. It needs just 2

members among which at least 1 should be a co-parcener of the HUF to claim the tax

benefits. For ex: If your charted accountant says that you could save up almost on half

the tax you are paying currently by setting up a HUF, any rational person would opt to

pay a minimal amount to the CA for his services and cut down on tax liability.

 Apart from a maximum exemption of ₹-2,50,000, these HUFs are using various other

benefits arising out of the Income Tax Act. On a whole this would amount to thousands

of crores in Tax revenue which the nation’s exchequer is being deprived of.6

 It is mostly the rich who are reaping the maximum benefit out of the institution of HUF.7

From the above two statistics, the only possible conclusion we can draw is that the

institution of HUFs though initially implemented to make sure families stay together by having

joint business and property and due to various other reasons mentioned under ancient Hindu

law, in today’s India it has been reduced to a mere tax avoiding entity.

Adding to all these, as per article 44 of the Indian Constitution, the government is

supposed to bring the nation under a Uniform Civil Code (UCC) and abolishing coparcenary

can be the first step in doing so. This preferential tax treatment of Hindus is unfair for people

belonging to other religions such as Islam, Parsi, Christianity and so on, and is thus violative

of Article 14 (Equality before law) and Article 15 (Prohibition of discrimination on grounds of

religion, race, caste, sex and so on).

5
It's High Time 'Hindu Undivided Family' Ceased to Be a Tax Entity, Available at: https://thewire.in/law/hindu-
undivided-family-tax
6
Ibid 5
7
Ibid 5
Page 3|4
 AJITH REDDY D
Has the time come, “To abolish the concept of Hindu Undivided Family in BBA-LLB,
Indian law”? SECTION C
2016-1560

Hence, with respect to the above arguments we can conclude that, “Its ‘HIGH TIME’ to

abolish the concept of Hindu Undivided Family in Indian law”.

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