Table of Contents
Can a Muslim family form HUF?
No, Muslim families cannot form HUF. Only Hindu and Hindu dissidents can form HUF.
What are the tax benefits of HUF?
The income tax slab for HUF is same as that of an individual, with an exemption limit of Rs 2.5 lakh and qualifies for all the tax benefits under Section 80C, 80D, 80G and so on. It also enjoys exemptions under Section 54 and 54F with respect to capital gains.
What deductions can HUF claim?
For example, an HUF can pay Life Insurance premium for individual members, and claim tax benefits under Section 80C. The maximum amount that can be claimed as a deduction under this section is Rs 1.5 lakh.
Can non Hindu create HUF?
One person cannot form HUF, it can only be formed by a family. A HUF is automatically created at the time of marriage. HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters. Hindus, Buddhists, Jains and Sikhs can form HUFs.
Can a Sikh form an HUF?
HUF means Hindu Undivided Family. Buddhists, Jains, and Sikhs can also form a HUF. HUF has its own PAN and files tax returns independent of its members.
What income can be shown in HUF?
The entity is allowed to earn from all legitimate ways except by way of salary. It can engage in business, investing in real estate and market linked investment options such as shares, earn income through rent etc. The HUF should file for ITR (Income Tax Returns) and income earned would be taxed as per the slabs.
Can a Muslim have a HUF?
However, even Buddhists, Jains and Sikhs are regarded as Hindus, and can, therefore, set up HUFs. The concept of an HUF has basically evolved from ancient Hindu law. But unfortunately, Muslims are not allowed to form HUF as muslims are not covered under the Hindu laws.
What is an HUF under income tax law?
An HUF is a separate entity (person under section 2 (31) the Income-Tax Act). “Under Hindu Law an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters”. Read here (external link) It comes into effect only after a person gets married.
What are the benefits of HUF dual benefit?
It is important to note that HUF enjoy tax exemption of up to Rs 2.5 Lakh. So, for members of HUF dual benefit is available once they can claim income tax exemption individually and then additional Rs 2.5 lakh exemption yearly under HUF. Further, they can also invest in shares and Mutual funds for long term profit-earning.
What are the benefits of a HUF in India?
However, the major reason and benefit of a HUF are that the member of the joint family are able to avail an extra PAN card and the members are able to split their income which results into saving on tax and reducing tax expenses.
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