HUF a/c tax treatment

In what way the HUF is beneficial from the point of view of saving income tax?
Asked 1 year ago in Income Tax from Vadodara, Gujarat
HUF will also have the same slabs for income tax rates like individuals. Thus the basic exemption of Rs 2.5 Lakhs and lower rates of tax upto the total income of Rs 10 L will be added benefits. 

B Vijaya Kumar
CA, Hyderabad
290 Answers
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Having separate PAN number all exemptions r available which are available to an individual 
Vijay Kapoor
CA, Delhi
14 Answers
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Following are our views of saving Income Tax in case of HUF :

1. A Hindu Undivided Family (HUF) is a separate entity for taxation under the provisions of sec. 2(31) of the Income Tax Act, 1961. This is in addition to an individual as a separate taxable entity; it means that the same person can be assessed in two different capacities viz. as an individual and as Karta of his HUF.
2. HUF gets the advantages of Income Tax Slab rate taxability and also qualifies for deduction u/s 80D (insurance premium paid on health of its members), 80G (Donation), 80C under the Income Tax Act 1961. It can also take exemptions under Section 54 and 54F with respect to Long term capital gains.
3. Under Wealth Tax Act, 1957 HUF is treated as distinct entity and enjoys separate taxability. Now wealth tax is being abolished as per latest budget.
4. Any income received by an individual as a member of the HUF out of the income of the family or out of the income of the estate of the family, is not taxable and exempt u/s 10(2) of the act.
5. Also gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.

HUF will be a good option for persons who have sufficient income and savings and who also have some ancestral property too (which could be treated as family assets for HUF). 
Shyam Sunder Modani
CA, Hyderabad
953 Answers
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Huf is a status available to Hindus in India. Firstly Huf will be independently assessed to income tax, so it has basic exemption of income upto Rs 2,50,000 apart from you individual income exemption of Rs 2,50,000. Also you have independent deduction for savings of Rs 1,50,000 and mediclaim. But for this you have to have an ancestral source to constitute an huf.
Vijay N. Kale
CA, Hyderabad
248 Answers
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The logic behind forming an HUF to save tax is to legally avail the benefit of an extra PAN Card. Just like an individual, a new PAN Card is allotted to the HUF and Tax would be paid by the Family on the income earned by HUF.

As a new PAN Card would be allotted to the whole family, it will also enjoy the benefits of Income Tax Slab
Rates which is same as slab rate of Individuals i.e. Income would be Tax Free up to the specified limits and would then be taxed progressively at 10%,20% & 30% resulting in tax saving.
Shiv Kumar Agarwal
CA, Delhi
195 Answers
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