HUF ITR Filing: According to the Finance Ministry, more than 8.75 lakh Hindu Undivided Families (HUFs) submitted income tax returns (ITRs) in 2022–2023 and claimed income tax deductions totaling Rs 3,803 crore. Minister of State for Finance Pankaj Chaudhary in a reply to the Rajya Sabha provided details of the number of Hindu Undivided Families (HUF) availing tax benefits (in the form of deduction under Chapter VIA of the Income-tax Act) during the last five years.
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A HUF is a family defined under Hindu law that consists of all lineally descended individuals from a single ancestor, including wives and unmarried daughters. Jain and Sikh households are also covered by this provision.
The Income Tax Act grants HUF the status of “legal person,” making them eligible for all Chapter VI-A tax deductions. HUFs are subject to the same rate of taxation as individuals and are eligible for the same deductions.
The ministry said that 8,75,948 HUFs claimed deductions of Rs 3,802.86 crore for the fiscal year 2022–23. In 2021–2022, 8,77,303 HUFs filed deductions totaling Rs 3,745.51 crore.
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Top 5 Income Tax Benefits for HUF ITR Filing
Income tax benefits
From a legal perspective, a HUF is a separate entity. In this case, each family member has a PAN card, and the HUF also has a PAN card. An HUF has the ability to manage its own business and make money. It can also invest in mutual funds and equities.
The HUF also benefits from a basic tax exemption of Rs. 2.5 lakh because it is a separate business. So imagine that you build a HUF with your husband, two kids, and yourself in it. You can take advantage of an additional basic income tax exemption of Rs 2.5 lakh annually in addition to the benefits you already receive from individual income tax perks.
Owning a house
Only one of your self-occupied properties can be recognized as such under current income tax regulations if you own multiple ones. You must pay tax on notional rent because the remaining properties are “deemed to be let out.” An HUF, however, is exempt from paying taxes if they own a home. Additionally, it may apply for a home loan to buy a residential property and receive tax benefits under Section 80C of the Income Tax Act for loan repayments of up to Rs 1.5 lakh and interest payments of up to Rs 2 lakh.
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Life Insurance
Certain payments made by individuals during a year may be eligible for tax benefits under provisions of the Income Tax Act. An HUF can enjoy comparable advantages. For instance, a HUF can pay the life insurance premium for a member while also claiming Section 80C tax benefits. The most that can be deducted in accordance with this rule is Rs 1.5 lakh.
Investments
Under Section 80C, a HUF is permitted to engage in tax-saving Fixed Deposits and Equity Linked Savings Schemes (ELSS) to receive tax benefits of up to Rs 1.5 lakh. Additionally, even though a HUF cannot create a Public Provident Fund (PPF) in its own name, it is nevertheless permitted to claim tax deductions for the money paid into each member’s personal PPF account.
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Health Insurance
Under Section 80D, you may deduct up to Rs 25,000 annually from the cost of your family’s health insurance premiums. This amount, however, may not be adequate if you wish to give your family access to quality medical coverage given the increase in health insurance rates. HUF can save the day for you in this situation. On health insurance premiums paid throughout the year for family members of the HUF, you may claim an additional tax advantage of up to Rs 25,000. The upper limit rises to Rs 50,000 for older citizens.
How to create HUF?
To create a HUF, 3 things are required:
Step 1: Create HUF Deed
Step 2: Apply for HUF PAN Card
Step 3: Open Bank Account of HUF
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Which ITR from should be used for HUF ITR Filing?
ITR form 2: Individuals and HUFs having a total income of more than ₹50 lakh. The income should not be from profits and gains of business or profession can file ITR-2.
ITR Form 3 – For individuals and HUF having income from business or profession, or an individual holding partnership in a firm may file ITR-3.
Or for easy process contact team BabaTax
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