Tax Planning TIPS for HUF

 

The following Tax planning tips can be useful to the HUF assesses. The tools given herein below are not exhaustive and there can be other tax planning tools also.

 

  1. GENERAL TAX BENEFIT OF UP TO RS 200000 /- FOR. A.Y. 2014-15 BEING THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX.

HUF is an important tool of assessment under the frame work of Income Tax Act, 1961 and as such when effectively used, it can serve as a best way to manage the joint family for the benefit of all those in the family. Now that even daughters have become coparceners in the joint family, it augurs well for the entire family and therefore, it is foremost that in respect of all ancestral property which is inherited by a Hindu, the status of HUF is claimed in respect of the said properties so that it can be used• as a corpus for the benefit of the entire family and for meeting the expenses of the entire family.


The creation of HUF is very easy as we have seen elsewhere and therefore it is important that every Hindu family creates a unit of HUF and the joint family ancestral property is cloned with the HUF properfy status.


The above not only gives the family a right to enjoy tax free income of upto Rs. 200000/-Being the maximum amount not chargeable to tax for A.Y. 2014-15, but also lets the family accumulate another sum equal to Rs. 100000/- by way of investment in the specified savings instruments to claim deduction u/s 80C of the Act as has been specified elsewhere. Moreover, a further deduction in respect of Section 8OCCF can also be claimed as per details given Chapter

 

  1. DEDUCTION I-N RESPECT OF MEDICAL INSURANCE PREMIUM U/S 80D OF THE INCOME-TAX ACT, 1961.

If the HUF is having a senior citizen as its member and any insurance premium is being paid by such senior citizen, then it is better to pay this premium from the HUF to avail of the higher deduction of Rs 20000.


Further, the provisions of Section 80D has been amended by Finance Act, 2007 to provide that the payment for medical insurance premia can be made by any mode other than cash. Thus, it is important that the payment should not be made by cash so as to loose the benefit of deduction under this Section. However, the payment can be made by any other mode like Credit card, ECS, Direct debit instructions etc.

 

  1. DEDUCTION IN RESPECT OF MEDICAL TREATMENT ETC U/S 8ODDB OF THE INCOME-TAX ACT, 1961.

If the HUF incurs any expenditure in respect of any member of its family for the purposes of medical treatment of the diseases as specified in Section 8ODDB, then it is eligible for a maximum deduction of Rs. 40000/- (Rupees 60000/- if the member is a senior citizen) from its total income. Thus, it is better to incur the medical expenses of a family member from the joint Hindu family property so as to claim deduction under this section.

 

  1. INVESTMENT IN THE NAME OF HUF

Now a days the income by way of Short term capital gains is eligible for a concession rate of tax @ 15% and the certain types of long term Capital gains are totally exempt from tax. It is advisable to let the Investments be made in the name of HUF assessee to avail of the concessional rate of tax in the Joint family and for the benefit of entire family.

 

  1. REMUNERATION TO KARTA ETC

Karta and other members working for the HUF business can be provided salary or working remuneration, which would be deductible and net taxable income can thus be reduced. Interest can also be provided to members on their own deposits.

 

  1. GENERAL EXEMPTION UNDER THE WEALTH-TAX ACT 1957
It may be noted that the limit of Rs. 30 lacs is available to HUF assesses also in respect of the Wealth of the family. Moreover, the family can claim exemption in respect of One House or part of House or a plot of land not exceeding 500 sq meters. For further details, the Chapter dealing with HUF-Wealth tax Act, 1957 can be referred to.

MORE TOPICS ....

HUF -  Capital Gain Account
HUF -  Deduction from HUF Business Income
Income Derived From Funds Of HUF -Whether Individual Income Or Family Income
Gift by HUF to its Member
Gift To Minor Daughters Out Of HUF Property Prior To Marriage
Gift of HUF Property to Stranger or to any Person who is a Alien to HUF
Clubbing Provisions In Case Of Gifts Received By HUF
Applicability of Clubbing Provisions in case Karta of a HUF is a Partner in a Firm
Gifts received by HUF from Aliens / Strangers
HUF - Investment Options
Concept of Multiple HUF’s
Whether a Single Member can Constitute a HUF ?
Whether any Limit is placed on Number of Members of a HUF ?
Whether HUF- Can Be Constituted with only Female Members ?
Drawings / Expenses of HUF
Whether HUF can be a Shareholder / Subscriber to the MOA ( Memorandum Of Association)  of a Company
Whether HUF can be a Member of a Cooperative Society ?
Whether HUF can be a Partner ?
Can KARTA of a HUF enter into Partnership with another Member of HUF ?
Can There Be A Partnership Between Two HUFs?
Effect Of Death Of Karta In Case Of Partnership Firm
Whether HUF Can Be A Proprietor ?
Whether HUF Can Be A Trustee / Settler ?
HUF - Aliyasantana Law
HUF - Marumakkattayam Law
Power of KARTA in relation to HUF
Managing Members in relation to HUF
Whether a Female can become a Karta ?
Tax Planning TIPS for HUF
HUF - Meaning Of Important Term- “Ancestral”
HUF - Meaning Of Important Term- “Stridhan”
HUF - Meaning Of Important Term- “Mitakshara”
HUF - Meaning Of Important Term- “ Dayabhaga”
Meaning of the term ‘Coparcener’ of HUF
Power of ‘Coparcener’ of HUF
Difference between a ‘Coparcener’ and a ‘Member’
Whether Husband / Wife Can Constitute A HUF ?
HUF - RECOVERY PROVISIONS
‘Maintenance of Accounts’ by HUF
‘Audit of Accounts’ by HUF
Applicability Of The ‘Accounting Standards’ On HUF
Whether Merger Of Two HUF is Possible ?
Residential Status of the HUF under I.T. Act.1956
‘Coparcener Property’ under HUF
 

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The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.
 
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Scrutiny assessment refers to the examination of a return of income by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence..
 
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Penalties by way of monetary payments are charged under the Income Tax Act for various defaults relating to payment of taxes, maintenance of accounts, for noncompliance and non co-operation during proceedings, for evasion of tax, etc..
 
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Section-139(1) : Provision for Voluntary Income Tax Return
Every person,— (a) being a company or a firm; (whether having income or loss) or (b) being a person other than a company or a firm if his total income or the total ncome of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall file a return of his income in the prescribed form.
 
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We have heard many a times that every individual whose total income exceeds the maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.
 
Section-139(9): Defective Tax Return
Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation.
 
Section 139(5) : Revised Income Tax Return
If any person, having furnished a return u/s 139(1), or in pursuance of a notice issued under section 142(1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time.
 
Section-139(4A) : Income Tax Return of Charitable and Religious Trusts
Every person in receipt of income derived from property held under trust or other legal obligation wholly or partly for charitable or religious purposes or of income being voluntary contributions referred to in section 2(24)(iia) shall.
 
Section-139(4) : Belated Income Tax Return
If an assessee has not furnished a return of his income within the time allowed to him under section 139(1) or within the time allowed under a notice issued under section 142(1).
 
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