Hindu families get special relief in tax, most people do not know

All taxpayers get time till July 31 to file income tax. Every taxpayer tries to save tax while filing ITR. But do you know that Hindu families get separate tax exemption?

Through this scheme you can save tax worth lakhs of rupees. This concession is not for any particular family but for any Hindu family in the country. Apart from Hindus, Jains and Sikhs also benefit from this.

According to income tax experts, there is a separate provision for Hindu undivided families in the Indian Income Tax Act. Any Hindu family can open an account under HUF and transactions, earnings etc. are treated as a separate individual.

They also get all the tax exemptions that are given to an individual taxpayer. Be it 80C benefit or long term capital gains or basic exemption of Rs 2.5 lakh. HUF can avail all these benefits.

How to take advantage of it?
To avail HUF benefits you have to create a separate PAN. You will have to do all the work related to finance through this PAN. Under HUF, the head of the family will be considered the Karta and all other members will be its members. As soon as a person joins the family by birth or marriage, he will be considered a member of the HUF.

This way you as an individual can start investing under HUF account and get tax benefits.

How does HUF Act work?
Under HUF you can invest individually and claim tax exemption. But it has to be kept in mind that you cannot get tax exemption by investing your earned money in it.

Now let us talk about how to attain salvation. Suppose you are working and your income is Rs 10 lakh per year. If you start a side business along with your job, then usually the earning is also deposited in your account and if you earn even Rs 5 lakh, you will directly reach the higher tax slab of Rs 15 lakh.

Also, you will not get any exemption on this income of Rs 5 lakh, because you have already taken all the exemptions on income of Rs 10 lakh.

Tax exemption is available here

• Tax exemption of Rs 1.5 lakh under Section 80C of Income Tax which includes investments made through life insurance, FD, PPF, small savings schemes, home loans and ELSS.
• Under Section 80DD, you get Rs 25,000 on the health insurance premium of you and your family and Rs 50,000 on the health insurance premium of your elderly parents.
• You can buy a house in the name of HUF, on the interest payment of which you get a tax deduction of Rs 2 lakh under Section 24B.
• Under Section 54F, long-term capital gains of Rs 1 lakh per year will also be exempt from tax if you invest in shares or equity funds. Earnings above this will be taxed at 10 percent.
• You can buy up to 2 properties in the name of HUF, which are tax exempt. You will have to pay tax at the national rate on property worth more than this.