Hindu Undivided Family

what is Hindu Undivided Family?

Hindu Undivided Family (HUF Separate Legal Entity with Separate PAN)

Karta  – Elder Male Member of Family Who Manage Everything

Co- Parceners – Member of HUF can Demand Partition

Member – Only Member

Drawback of Hindu Undivided Family

All the assets in the name of HUF are assets of the family so all family member have a right in the assets of HUF.
Need to file 2 Times ITR.

Hindu Undivided Family TAX BENEFITS OF INCOME TAX RETURN

An HUF can claim deductions under Section 54, Section 54B, Section 54D, Section 54EC, Section 54F, Section 54G, and Section 47 of the Income Tax Act, 1961. You have to get a separate PAN and open a bank account in the name of the HUF to claim the income tax benefits.

As the financial year is approaching an end it’s the time to go for all-last minute tax saving investments to reduce your income tax liability for the financial year 2023-24. Apart from the traditional tax-saving investments, there is another route to save more tax.

• HUF is treated as a separate entity, so all these deductions will apply separately to HUF along with the individual deductions.
• Transferring rental income from property to HUF and opening a demat account in the name of the HUF, among others as a few ways to claim more tax benefits. Transferring any property yielding rental income to the HUF, opening a Demat account in the HUF name, transferring money to the HUF bank account, accepting gifts, etc.
• Moreover, people following the religions of Sikhism, Jainism, and Buddhism are also eligible for the benefit of HUF.
• It’s important to note that an HUF can only be set up by Hindu, Buddhist, Sikh and Jain families.
• HUF isn’t just a tax-saving strategy, it’s a game-changer. By leveraging its benefits, you can take control of your finances and secure a brighter future
• A Hindu Undivided Family, or HUF, is basically a family consisting of lineal descendants, including wives and unmarried daughters from a common ancestor. As HUFs are treated as separate legal entities under the income tax law in India, they are offered a number of tax benefits, besides the tax deductions allowed to individual members
• ile the head of the family, also known as ‘karta’, leads the HUF, other members are coparceners. A HUF can be formed with just two members, say the husband and wife; however, the wife is considered a member and not a coparcener. For tax purposes, one must have at least two coparceners
• HUF can claim deductions under Section 54, Section 54B, Section 54D, Section 54EC, Section 54F, Section 54G, and Section 47 of the Income Tax Act, 1961.

How to form Hindu Undivided Family?

• Create a HUF Deed on Stamp Paper Notarized
• Apply for PAN
• Opening a New Bank Account

Benefit of Hindu Undivided Family

1. HUF has separate PAN
2. HUF is equivalent to Individual
3. Tax Exemption benefits
4. Tax Deductions U/s 80C

Capital of Hindu Undivided Family

• HUF – Accept Gift from 50K
• Loan – can accept loan from member
• Property – HUF can own Property   – Rental Income   – Interest Income

Hindu Undivided Family can Invest

• Business
• Share market and Mutual Funds
• FD
• HUF can Hold Movable and Immovable Property
• Other Sources

Hindu Undivided Family can earn from all Head of Income except Salary

Earning Calculation

• 4 Family Members – Husband Wife and 2 Children
• Husband Income – 12 Lakh
• Wife Income – 8 Lakh
• Income from house Property – 5.25 Lakh

Source of Income	Individual`s  Return	Income after formation of HUF	Income of HUF
Salary	20,00,000	20,00,000
Income From House Property	5,25,000	–	5,25,000
Total Taxable Income	25,25,000	20,00,000	5,25,000
Less: Section 80C	1,50,000	1,50,000	1,50,000
Net Income	23,75,000	18,50,000	3,75,000
Tax Payable	5,53,625	3,91,400	7,725

FAQ