A Hindu Undivided Family (HUF) consists of individuals who have lineally descended from a common ancestor. In addition to Hindus, even Jain, Buddhist and Sikh families can create HUFs. The concept of a Hindu Undivided Family (HUF) as a separate entity for tax purposes was first recognised in 1917. And over the years, many families have enjoyed tax benefits because of this.
Huf Tax Benefits
- By forming a Hindu Undivided Family, you can optimise your tax liabilities and also include your family members to benefit in the future
- For the sake of income tax, the HUF is considered as a separate entity and is therefore taxed separately
- Although HUF is governed by the Hindu law board, it can be formed by Jains, Sikhs and Buddhists as well
- Shutting down the HUF is a difficult process and hence it is impossible to proceed with unless all the HUF members agree to the partition