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What is HUF and what are the tax benefits of it?
- Ruchit Patel
A Hindu Undivided Family (HUF) is a joint family with many generations living together. Generally a husband, wife and children and children's spouses all living together, are considered to be part of a HUF. The property owned by this family will be passed on through lineal ascendants. There are a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF.
Under the tax laws in India, a HUF is assessed to tax separately as a distinct legal person. It means, like you and I, it is a taxable entity. Therefore, like an individual taxpayer, it has all the benefit of Income Tax Slabs, Deductions u/s 80C and the majority of the tax provisions including exemptions which are otherwise available to Individuals. So, if an individual belongs to a HUF, he is able to structure his taxable income or split his taxable income between his Individual self and his HUF, he can claim benefits for deductions and expenses in both capacities, thereby substantially reducing his overall tax liability. An individual can file two income tax returns, one in his individual capacity and second in the name of his HUF.
This article was originally published on May 19, 2017.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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