Table of Contents
How can HUF be used as a tax planning tool?
HUF can be used as an efficient tax saving tool that can be used to reduce taxes by proper Tax Planning. So, we can conclude that family is assessable as a unit and has to hold a separate PAN card for earning income and getting assessed under Income tax act, 1961.
How can I save my income tax in HUF?
Basically the logic behind forming an HUF to save tax is to avail the benefit of an extra PAN Card legally. As the Income of the Family is not taxed in the hands of any specific Individual, a new PAN Card is allotted to the HUF and Tax would be paid by the Family using this PAN Card.
What are the advantages of HUF?
Advantages of Creating HUF:
- Just like other individuals, even HUF members are liable to pay taxes every year.
- The head of a HUF has all the power to sign the relevant documents on behalf of other members in her/his family.
- An adopted child may also become a member of the HUF.
Can HUF account be savings account?
A HUF can open a Bank account in any bank. The types of Bank accounts that can be opened by a HUF are Savings Account, Current Account or Term Deposit Account. In addition to this, it is also possible for HUF to open Accounts relating to borrowings from bank by way of Cash credit, Term Loan or any other types of loan.
Can HUF invest in mutual funds?
An HUF can run its own business to generate income. It can also invest in shares and Mutual Funds. And being a separate entity, the HUF enjoys a basic tax exemption of Rs 2.5 lakh.
Can HUF invest in tax saver FD?
An HUF is allowed to make investments in tax-saving Fixed Deposits and Equity Linked Savings Scheme (ELSS) to earn tax benefits of up to Rs 1.5 lakh under Section 80C.
Can HUF claim 80D deduction?
HUF can claim a deduction under Section 80D for a mediclaim taken for any of the members of the HUF. This deduction will be Rs 25,000 if the member insured is less than 60 years, and will be Rs 50,000 if the insured is 60 years of age or more.
How is HUF taxed?
A HUF is taxed separately from its members, therefore, deductions (such as under Section 80) or exemptions allowed under the tax laws can be claimed by it separately.
Is HUF savings or current account?
Features of HUF Account Every member of the family can deposit their income in this common corpus account. HUF bank account is similar to the personal saving bank account. This account has its own debit card, cheque book and internet banking.
What is the tax rate on savings in HUF?
Now ignoring any deductions if such income is taxed in hands of any family member it shall be taxed at 30\%. However, if such income is shown in hands of HUF then there shall be exemption up to Rs 2.5 lacs I.e., savings of Rs 75,000.
How to open a savings account with HUF?
Open a bank account in the name of the HUF (the bank will provide the format for the karta of the HUF to open the savings account) Transfer assets / property to the HUF – keep in mind clubbing provisions and tax on gifts to the HUF What are the points to be kept in mind when creating capital for the HUF?
Can a HUF pay salary to its members?
HUF can pay salary to its members and show it as an expense. This will reduce the annual income of the HUF and also decrease the overall income tax payable. Note: HUFs should file their Income Tax Return by 31st July of the relevant assessment year.
What is the income of HUF under Section 80C?
After forming the HUF, total annual income of Mr. A includes his salary only. Thus, the tax benefit that he can claim on his income as an individual under Section 80C is Rs. 1.5 lakh. Notably, rent from ancestral property is considered as the income of the HUF.