In the news related to income tax, you may have found the word Hindu undivided family (HUF) many times. What does it mean? Why does this word come again and again in news related to income tax? In fact, in income tax rules, HUF has been considered an entity like an individual taxpayer. This means that the way an individual taxpayer can invest in shares, can buy property, claim the tax Dids, can also make HUFs in the same way. Since, there has been a trend of joint family in India for decades, which also includes provisions of tax for Hindu undivided families in income tax rules.
Basic Exgption Limit for HUF
Like individual taxpayers Hindu undivided family ,Huff) The limit of basic exhalation is also fixed for. It is Rs 4 lakh in the new reizards of income tax, while the old regim has Rs 2.5 lakh. This means that if the annual income of HUF does not exceed this limit, then it will not have to pay tax.
Tax exemption on investment in shares and mutual funds
HUF is allowed to invest in shares and mutual funds. If the equity scheme of shares and mutual funds has a long -term capital gains up to Rs 1.25 lakh in a financial year, then it will not have to be paid tax. Individual taxpayers also get this exemption from tax on long term capital gains. This means that the way someone can invest in individual taxpayer shares and mutual funds, he can also do HUF.
Discussion under section 80C and 80D
HUF also gets the benefits of tax deals under section 80C of Income Tax. This means that like the individual taxpayer, he can claim tax deduction by investing in some investment options under Section 80C of Income Tax. For example, he can buy a life insurance scheme and claim deeds on his premium. Mutual funds can invest in the tax-savings scheme and claim deduction on it. Under Section 80D of Income Tax, he also has the right to claim deduction on the premium of health policy. It is a matter of keeping in mind that all these deeds are available in the old regimen of income tax only.
Tax benefits on buying home and home loan
Property can also be purchased in the name of HUF. HUF can also take home loans to buy a house. Like individual taxpayers, he also gets tax benefits on home loan principal and interest. However, it is important to keep in mind that these two benefits are available in the old regimen of income tax. This means that if HUF uses the new reizards of income tax, he can take a home loan to buy a house, but cannot claim deeds on his principal and interest payment.