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HUF category income sources ?

pratik shah (1 Points)

23 October 2017

what are the sources to increase HUF Capital ?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (180121 Points)
Replied 23 October 2017

HUF being a separate assessable entity as per the provisions of Section 2(31) of the Income-tax Act,1961 and a separate legal entity

A HUF can earn income from all sources except Salary.

It can enter into any business/ profession and even enter into a partnership business with any other individual.

HUF can invest in shares and mutual funds.

Any dividend income accruing from such shares or Long-term Capital Gains on sale of listed securities will be exempted from tax. The income from Short-term Capital Gain will be eligible to a lower tax rate of 15 % tax only.

HUF is very well capable of doing business in its own name. There is no bar on HUF doing business. HUF can become proprietor of such a business and business name can be distinctive and different from the name of the HUF

HUF can purchase life insurance or medical insurance policies in the name of its members.

HUF can invest in real estate. It can apply for home loan to purchase house property and also avail tax deduction in respect of principal amount paid u/s 80C and interest on loan u/s 24b. The HUF can earn rental income from such property.

HUF can invest in bank fixed deposits.

Refer: capital-formation-of-hindu-undivided-family

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 23 October 2017

Thank you for the reply My Dear Mr Dhirajlal Rambhia Sir....

What are reasons persons forming HUF entity...?

What is the benefits from HUF business or Profession compared to other firm...?

Please Sir

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (180121 Points)
Replied 23 October 2017

A Hindu Undivided Family (HUF) offers specific advantages as far as taxation is concerned. The Income Tax Act recognise the HUF as an independent assessable or taxable entity.

Hence, HUFs enjoy all deductions and exemptions under the IT Act independent of the income and tax liabilities of its members. The Hindu Law defines the HUF as a family, which consists of males lineally descended from a common ancestor and includes their wives and unmarried daughters.

Refer: 1 how-to-save-taxes-by-forming-huf

2. huf-hindu-undivided-family

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