![]() HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters.An HUF is automatically created at the time of marriage.One person cannot form HUF, it can only be formed by a family.While there are tax advantages of forming an HUF, you must also meet some conditions – Need help with estimating your taxes as an HUF? Our CAs can help you How to form an HUF? Furthermore, the income of the HUF can be invested by the HUF and will continue to be taxed in the hands of the HUF. Both HUF and Mr Chopra (as well as other members of the HUF) can claim a deduction under section 80C. Chopra after formation of HUFĭue to this tax arrangement, Mr Chopra saved tax of Rs 1,54,500. By creating a HUF, Mr Chopra can save tax, see below. Mr Rajesh Chopra has an income from salary of Rs 20 lakh. The property held by late Mr Chopra earns an annual rent of Rs 7.5 lakhs. ![]() Since Mr Chopra had no siblings, the property held by his father was transferred in the name of the HUF. Let’s understand how an HUF is taxed with an example – After the death of his father, Mr Rajesh Chopra decides to start a HUF with his wife, son, and daughter as members.
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