Before guiding you about the benefits of HUF, let me walk you through the HUF concept first. Hindu Undivided Families, or HUFs, are formed when related family members have an ancestor in common. Hindus, Jains, Buddhists, and Sikhs can manage their families and bring together their resources to make HUFs. Now read below to know what are the benefits of HUF in income tax.
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1) So if you add together the tax benefits of HUF, it seems to be the clearest advantage. Utilizing the mechanism of HUF split, tax planning via HUF increases the number of definable components.
2) You can create several taxable HUF entities using the will or gift weak points. For tax reasons, the HUF deducts any property, savings, or insurance premium payments from net earnings.
3) A woman belongs to both her father's and her husband's HUF. A woman may be a coparcener in the HUF despite she is not allowed to have a private account because her husband is the Karta. The woman's extra revenue cannot be applied to this.
4) You can note that the legal position of a HUF continues to exist in the hands of women. It is in the situation when Karta or the remaining male person in the family passes away. Therefore, the widows retain ownership of the acquired or inherited properties of the HUF and are therefore not required to divide them.
5) Many families choose to create a HUF because they can request two PAN cards and file taxes independently. Their individual revenues are not required to be included in the HUF's income.
6) It is currently acknowledged that there is no need for the fundamental or ancestral joint family properties for the HUF to operate as a result of numerous latest judgements.
What are the disadvantages of the HUF account?
1) Any corporation cannot accept a HUF as an equal member. It is acceptable for the Karta, or even a HUF member, to lead the HUF in a business.
2) The same is true for women. However, because it comes into the class of "HUF revenue," the income produced may be subject to taxation.
3) A HUF's funding can be challenging. Assets may only be carried in through gifts or inheritance.
4) HUF is not known in other nations because it is exclusively an Indian concept. The income analysis gets difficult if some families relocate overseas for employment or schooling.
I hope you understood the benefits of HUF clearly.
Read More: What is HUF in income tax? What is 80G in income tax? Can females become Karta of HUF?Your Feedback Matters! How was this Answer?
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What is the benefit of HUF account?
Jaya
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2022-09-14T21:09:21+00:00 2022-09-14T21:09:22+00:00Comment
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