InvestorQ : What are the income-tax benefits given to the Hindu Undivided Family(HUF)?
Khushi Patel made post

What are the income-tax benefits given to the Hindu Undivided Family(HUF)?

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Anjana Aiyar answered.
9 months ago


HUF is an organization in which its members by birth acquire an interest in the joint family business. It includes all members of the family, their descendants, kids, and wives.

Under the Income Tax Act, 1961 HUF has been given certain exemptions that are similar to that of an individual. One can be Hindu, Jain, Sikh or Buddhist to avail benefits under HUF.

Under the income tax act, HUF has been given the same benefits and exemptions that are available to a resident Indian who is not a senior citizen. The first benefit of HUF is that any income arising due to inheritance of HUFs property/business will be carved out and shown as HUF income. Therefore, HUF shall be treated as a separate entity and shall be given tax benefits that apply to an individual. This will lead to lesser tax liability as compared to that without the benefits of HUF.

Another benefit that one can get is when they receive gifts individually, it could be treated as gifts to the HUF and will be taxable accordingly, and henceforth tax will be reduced for all the members. However while there are so many tax benefits associated with HUF, it has one biggest disadvantage, that any property that is transferred to HUF shall remain with the HUF and will only be transferred when all the coparceners agree to the partition. One cannot mention the property of HUF in his will.