Tax saving through HUF: Tax saving investments a Hindu Undivided Family is eligible for

By forming a Hindu Undivided Family (HUF), assessees belonging to Hindu, Jain, Buddhist and Sikh households could save taxes by diverting their unearned and funding incomes through the organisation.

Dr. Suresh Surana, Founder, RSM India, lists the next investments, which can be diverted through HUF and taxes could also be saved on the earnings generated through such investments:

Immovable Assets

Similar to an Individual, HUF is eligible to put money into each movable in addition to immovable belongings. Thus, out of the earnings of an HUF, it could put money into each immovable properties resembling land, constructing, home property, and so on. Where an HUF makes an funding in a home property, the HUF can declare the advantage of NIL Annual worth as much as two such homes whereby no tax legal responsibility can be incurred.

However, any extra home property owned can be handled as ‘Deemed to be let out’ and subjected to tax. HUF may declare tax deduction for curiosity on home mortgage u/s 24(b) of the Income Tax Act, 1961 (hereinafter known as ‘the IT Act’) in addition to principal fee u/s 80C of the IT Act.

Financial Assets

An HUF may put money into movable properties resembling shares, bonds, mutual fund, NSCs, Kissan Vikas Patra and so on. Such investments would even be individually eligible for tax advantages supplied the identical is coated inside the ambit of the related provisions of the IT Act as HUF has a PAN separate from its members.

For occasion, Investment in NSC, Equity Linked Savings Scheme (ELSS) – topic to three years lock in interval, Fixed Deposits topic to five years lock in, and so on. may be claimed as tax deduction by an HUF u/s 80C of the IT Act topic to the edge restrict of Rs 1.5 lakh.


Apart from the above, HUF can avail life insurance coverage in addition to medical insurance insurance policies on the lifetime of its members and can be eligible for tax deduction supplied the fee for the premium on such insurance policies is made by the HUF and accordingly declare tax deduction u/s 80C and 80D of the IT Act respectively.

Back to top button