A HUF can earn income from all sources except Salary.

It can enter into any business/ profession and even enter into a partnership business with any other individual.

HUF can invest in shares and mutual funds.

Any dividend income accruing from such shares or Long-term Capital Gains on sale of listed securities will be exempted from tax.  The income from Short-term Capital Gain will be eligible to a lower tax rate of 15 % tax only.

HUF can purchase life insurance or medical insurance policies in the name of its members.

HUF can invest in real estate. It can apply for home loan to purchase house property and also avail tax deduction in respect of principal amount paid u/s 80C and interest on loan u/s 24b. The HUF can earn rental income from such property.

HUF can invest in bank fixed deposits.

The income earned by HUF will be subject to tax as per tax slabs available to Individuals, after claiming deductions under Chapter VI-A. More information on tax deductions that can be claimed by HUF are given here.

Every HUF is required to file tax returns by 31st of July.

In case the gross turnover exceeds Rs. 25 lacs/ Rs. 1 crore, it will also require a tax audit conducted by a CA and the tax return will have to be filed by 30th September..

 

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