HUF, Documents required and Various exemptions available

Various tax exemptions available in HUF

Hindu Undivided Families (HUFs) in India can avail themselves of various tax exemption sections under the Income Tax Act, 1961, which help in reducing their overall tax liabilities. Here are some of the key tax exemption sections available to HUFs:

1. Section 10(2): Exemption of Agricultural Income: Like individuals, HUFs can avail themselves of the exemption on agricultural income earned from land situated in India.
2. Section 10(32): Exemption for Share of Income of Minor Child: HUFs can include the income of minor children (up to two children per family) and avail exemptions up to certain limits.
3. Section 54: Exemption on Long-Term Capital Gains on Sale of House Property: If the HUF sells a residential property and invests the proceeds in purchasing or constructing another residential property, it can claim exemptions under Section 54 on long-term capital gains arising from the sale.
4. Section 54F: Exemption on Long-Term Capital Gains on Sale of Any Asset Other Than House Property: Similar to Section 54, if the HUF sells any asset other than a house property and invests the proceeds in purchasing or constructing a residential house, it can claim exemptions under Section 54F on long-term capital gains.
5. Section 10(38): Exemption on Long-Term Capital Gains from Equity Shares and Equity-Oriented Mutual Funds: If the HUF invests in equity shares or equity-oriented mutual funds and earns long-term capital gains on their sale, such gains can be exempt from tax under Section 10(38) if certain conditions are met.
6. Section 80C: Deductions for Investments and Expenses: HUFs can avail deductions under Section 80C for investments in specified instruments such as Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), National Savings Certificate (NSC), etc., up to a maximum limit.
7. Section 80D: Deduction for Health Insurance Premium: HUFs can claim deductions for the premium paid towards health insurance policies for themselves, spouse, and dependent children under Section 80D, subject to specified limits.
8. Section 80G: Deduction for Donations to Charitable Institutions: If HUFs make donations to eligible charitable institutions, they can claim deductions under Section 80G, subject to certain conditions and limits.
9. Section 80TTA: Deduction on Interest from Savings Bank Account: HUFs can claim deductions on the interest earned from savings bank accounts up to a specified limit under Section 80TTA.
10. Section 10(26): Exemption of Income of Members of Scheduled Tribes or Tribals: If the HUF consists of members belonging to Scheduled Tribes or Tribals, their income may be exempt under Section 10(26).