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HUF Online ITR Filing: Tax Benefits for HUFs

Do you want to save your Income Tax? So, forming a HUF, i.e., a Hindu Undivided Family, is a good option for you. The Hindu Undivided Family is a unique legal entity separate from its individual members. The HUF has been formed by Hindu families, and even Buddhists, Jains, and Sikhs can also form a HUF. This concept of HUF is specifically based on the idea of a joint family, and the head of the family will be the “Karta”. A Hindu Undivided Family consists of all the members of a family, including husband, wife, children and their respective spouses. You can save the tax by online ITR Filing as a Hindu Undivided Family. Here in this blog, we will discuss about the tax benefits that a HUF will get during ITR Filing online. 

Before moving ahead, let’s talk about Income Tax & Income Tax Return Filing

  • Income Tax is the direct tax that the public pays to the government of India every year. It is imposed by CBDT, i.e., the Central Board of Direct Taxes, on the individuals of India.
  • The Income Tax Return is a self-declaration form that the public uses to declare their income.
  • ITR Filing is the process by which taxpayers can report their income, deductions, and credits to the government. Tax authorities use this information to calculate the amount of tax payable or the refund due. 

Tax Benefits for HUFs for Online ITR Filing

Hindu Undivided Families have a separate PAN number from their members. A HUF can enjoy the benefits of a basic exemption limit of Rs. 2.5 Lakhs. They can also get the various tax benefits as a HUF. In this section of the blog, we will discuss the several benefits that you can get after forming a HUF. Here are the tax benefits-

Separate Legal Entity for Tax Purposes

  • A Hindu Undivided Family has been considered as a separate legal entity, especially for tax purposes. So, a HUF has its own PAN, i.e. Permanent Account number, and hence they file a separate Income Tax Return. In such cases, the HUF will split the income of the family accurately and it will result in a decrease in the overall tax liability. It can be specifically beneficial for the HUF having the income from different sources including rent, interest, or business. 
  • However, an HUF enjoys the same tax slabs as an individual taxpayer. As the family income can be split in HUF, so they can enjoy the lower tax rates to file Income Tax Return.

Tax Benefits for Gifts & Inheritances

The Hindu Undivided Families can enjoy an additional benefit when we talk about receiving gifts & inheritances.

  • If a HUF receives gifts from its members, they are tax-free. Moreover, gifts received by an HUF from any other HUF or relatives are also exempt from tax, but they are up to a certain limit.
  • When HUFs receive property or assets from their ancestors as inheritance, they will also be exempted from tax. This will be beneficial for HUFs.

Deductions under Section 80C

HUFs can claim deductions of up to Rs. 1.5 Lakhs (similar to individual taxpayers) on various investments and expenses as per section 80C of the Income Tax Act, reducing their tax liability.

  • HUFs can claim deductions on various investments, including Life Insurance Premiums. EPFs (Employee Provident Fund), PPFs (Public Provident Fund), NSCs (National Savings Certificates), as well as ELSS (Equity Linked Saving Schemes.
  • HUFs are also eligible for the deductions under Section 80C including payments towards the principle repayment of a Home loan, tuition fees of children and many more specified saving schemes.

Exemption on Long-Term Capital Gains

HUFs, i.e., Hindu Undivided Families, are also eligible for long-term capital gains, including the sale of long-term capital assets. This is subject to certain conditions.

Deduction for Business Expenses

In case, the HUF has been engaged in business or profession, then they are also eligible to claim deductions of various business expenses (similar to the other business entity) during Income Tax Return Filing.

  • An HUF can claim deductions for various business expenses, including office rent, salaries of the employees, utility bills of office, office supplies and many more.
  • HUF can also claim deductions for the expenses on capital assets including machinery, equipment, as well as buildings. For this, HUFs can split the cost over several years that will result in reducing the taxable income each year. 

Deductions for Donations under Section 80G

HUFs can also claim deductions for the donation that they made to the recognized charitable institutions under Section 80G. You can claim a deduction of about 50% to 100% of the donated amount as per the type of charity.

Home Loan Interest Deduction

If HUFs paid the interest on home loan that had been taken in its name, then they can claim the deduction under section 24(b). You can claim a maximum deduction of around Rs. 2 Lakhs per annum.

These are the major tax benefits that you can enjoy after forming a HUF, i.e. Hindu Undivided Family. You can get these benefits while Income Tax Return Filing. To get a clear picture of these tax benefits, you can seek the professional guidance of reputable ITR Filing consultants.

Tips to Manage HUF Finances for Online ITR Filing

It is crucial for the Hindu Undivided Families to maintain the finances properly in order to file Income Tax Return & utilize the tax benefits available. In this section we will provide you some tips for the same. Here are the tips-

  • Regular Investments

HUFs should invest regularly in tax-saving instruments that are eligible for deductions under sections 80C and 80D. This will reduce their total tax liability.

  • Maintain Proper Records

As an HUF, you should have to keep the detailed records of all the transactions that include income, expenses, as well as investments. If you maintain the proper record, then you can file Income Tax Return precisely and avoid legal issues.

  • Seek Professional Guidance

It would be best for the HUFs to seek the expert advice of ITR Filing Consultants in order to make sure that all the legal & tax related aspects have been handled properly. CA near me for ITR filing also helps in identifying the additional options of saving tax.

Common Mistakes HUF Should Avoid While Online ITR Filing

For a successful ITR Filing online, it is crucial for the HUFs to avoid some of the common mistakes or else it will lead to the tax complications. Here are such mistakes-

  • Incomplete Documentation

You should make sure that all the documents related to the transactions, specifically the transfer of assets should maintain properly. If your documents are incomplete, then it will lead to legal disputes and tax penalties.

  • Mixing Personal & HUF Finances

It is advisable to keep the personal finances separate from the HUF finances. If you mix them, it will lead to confusion & hefty tax issues.

  • Ignoring Compliance

HUFs should stay updated with the tax laws and also make sure about the timely filing of tax returns & other compliances. If you ignore the compliances, then it will attract the hefty penalties & interest.

Why Legal Pillers is best for Online ITR Filing of HUFs?

Among the numerous options available, Legal Pillers stands as the premier choice of HUFs for Income Tax Return Filing. Our dedicated team has the expertise in tax laws & regulations related to HUFs. Here, in this section of the blog, we will discuss about the reasons why Legal Pillers is best.

  • Maximize Tax Refunds

Legal Pillers will help you in maximizing your tax refunds by claiming all the deductions available for Hindu Undivided Families precisely. Our professional team of experts will tell you about all the possible ways that reduce your tax liability.

  • Minimize Stress

With Legal Pillers, you will get the peace of mind. Our team is there to handle everything and reduces your stress, you just stay relaxed. We will also make sure about all the possible tax benefits available for HUFs.

  • Secure and Reliable

Sometimes people thought that online platform is not secure. Legal Pillers have a completely secure & reliable online platform as your privacy is our priority. You can stay calm making sure that your sensitive information is in safe hands.

  • Save Time and Effort

Our dedicated team of professionals has the exceptional expertise in filing ITR for HUFs. Our top notch services will save your time and effort so that you can focus on what matters most.

These are the major reasons why Legal Pillers is the best for ITR Filing online for HUFs. We have the top-notch ITR Filing Consultants having expertise in tax related laws. You can easily find us by searching “CA near me for ITR Filing”.

Final Words

If you form an HUF i.e. Hindu Undivided Family, you will get the number of tax benefits while Income Tax Return Filing. It will reduce the overall tax burden of a family. As HUF is a separate legal entity, so you can split your income and claim the deduction under various sections. It is crucial for you to understand the legal & tax implications properly, whether you want to form a Hindu Undivided Family or manage an existing one. If you need clarification about the various deductions available for the HUFs, you can seek the expert assistance of the reputable ITR Filing Consultants like Legal Pillers. Legal Pillers has a dedicated team of professionals that guides you through the process of filing Income Tax Returns for HUFs. So what are you waiting for? Choose Legal Pillers as your trusted partner in order to stay compliant with the tax requirements of a Hindu Undivided Family.    

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