Understanding HUF (Hindu Undivided Family)

 Tax & Compliance Insights 🎯💡

🔍 Understanding HUF (Hindu Undivided Family) HUF is a unique entity under Indian tax law that offers tax benefits by treating a family as a separate taxable unit. Here's what you need to know: ✅ Who can form an HUF? A Hindu family (including Buddhists, Jains, and Sikhs) with common ancestors can create an HUF. It consists of a Karta (head of the family) and Coparceners (family members). ✅ Why form an HUF? 🔹 Separate PAN & tax benefits 🏦 🔹 Can own property & run a business 📊 🔹 Income splitting reduces tax liability 💰 ✅ How is HUF taxed? HUF files a separate tax return, enjoys basic exemptions, deductions under 80C, and slab rates, just like an individual. 📌 Example: Let’s assume: 🔹 Mr. A earns ₹25 lakh annually. 🔹 His HUF owns property generating rental income of ₹7 lakh. ➡ Without an HUF: Mr. A would be taxed on ₹32 lakh. ➡️ With an HUF: ₹7 lakh is taxed separately, reducing his tax burden by approximately ₹2 lakh per year 🔹 Tip: HUF can be a great tool for tax planning, but managing it requires proper record-keeping and compliance.

Comments

Post a Comment

Popular posts from this blog

Key Highlights of Section 194T:

Key Highlights of Section 194T: ✅ Effective from: April 1, 2025 ✅ Who needs to deduct TDS? Firms & LLPs ✅ Threshold Limit: ₹20,000 per financial year (Aggregate) ✅ TDS Rate: 10% (20% if PAN/Aadhaar not provided) ✅ Applicable on both working & non-working partners ✅ No exemption via Form 15G/15H or lower TDS certificate 🔹 Why is this important? Earlier, no TDS was required on such payments due to Section 40(b), but from April 1, 2025, firms/LLPs must deduct TDS before crediting or paying these amounts. This is a significant change impacting partnership firms, LLPs, and their partners. Firms must now ensure TDS compliance to avoid disallowance under Section 40(a).
Read more

My CA Journey summary

  Chartered Accountancy (CA)  is one of the most popular   professional courses . It is one of the Toughest courses in the world. It requires an integration of intelligence, hard work , Patience, Determination and continuous dedication with non-stop efforts.  Many aspirants relinquish this challenging journey and replace their dreams with  some other career options . My CA journey mentioned  below in  short summary: If I can become a Chartered Accountant anyone CAN. I Came from a village background with Telugu medium upto graduation. After graduating, I was confused as to what I should do. My Big Brother wanted me to pursue CA so that I have a degree, which would help me get a basic job and the required financial support in the future. That is when I decided to study further and become a Chartered Accountant. Initial period of my CA journey I was faced with a little bit of a medium issue, however I was able to clear the 1st 2 stages of CA early by spen...
Read more

GST on Corporate Guarantee

GST on Corporate Guarantee : one company (let’s say Company H) provided a corporate guarantee to a Bank or Financial institutions on behalf of its related entity, Company S . Since Company H and Company S are related persons under GST law, the question arises: ➡ Is a Corporate Guarantee taxable under GST? ➡ If yes, on what value should it be taxed, considering it is provided free of cost? Analysis As per Section 7(1)(c) read with Para 3 of Schedule I of the CGST Act, 2017, any supply of goods or services between related persons or distinct persons, made in the course or furtherance of business, is deemed a supply even without consideration. Further, Rule 28(2) of the Valuation Rules, 2017, provides that the value of a Corporate Guarantee shall be determined as: ✅ 1% per annum of the guaranteed amount (irrespective of whether the loan is partly or fully utilized) OR ✅ Actual consideration charged (if any) Whichever is higher However, as per the proviso under Rule 28, if the recip...
Read more