Answer

Estate planning · HUF

How much tax can a HUF save: real numbers

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  1. Facts

    HUF gets identical tax slabs to an individual. The savings come from splitting income, some income goes into the HUF's hands and is taxed at HUF level, reducing the individual's taxable income.

  2. Provisions and law

    • Income Tax Act 1961, Sec 115BAC (now 202

  3. Analysis

    Example: Rental income of ₹6L/year. If in your hands (₹30L salary earner) → taxed at 30% = ₹1.8L tax. If in HUF's hands → ₹2.5L exempt, ₹3.5L taxed at lower slabs = ₹5,000 tax. Annual saving: ₹1.75L from one HUF move.

  4. Conclusion

    1. Rental income from HUF-owned property
    2. Capital gains from HUF investments
    3. Business income if HUF runs a business
    4. Interest on HUF bank FDs and investments
    5. Gifts received by HUF from non-members (taxable but at HUF slab)

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Updated return, ITR-U, Sec 263(6) (old 139(8A))

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