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18 SEPTEMBER, 2019
The Family That Prays Together Stays Together.
In India, this saying gets an extended meaning due to the various benefits of staying in an undivided family. Along with security and happiness, staying in the undivided family brings many financial benefits as well. This is especially true in the case of Hindu Undivided Families (HUF).
What is a Hindu Undivided Family?
A Hindu Undivided Family is a family that consists of all persons lineally descended from a common ancestor, including their wives and spinster daughters.
The common ancestor in a HUF is called as Karta or the head of the family, who is typically the eldest member of the family. The Karta is known to operate the day-to-day working in HUF. The children of Karta are called as coparceners.
While the process to get a home loan remains the same as other borrowers, the eligibility conditions for an HUF are different when compared to individuals applying for a home loan.
What is the home loan eligibility criteria for an HUF?
The home loan eligibility criterion for a Hindu Undivided Family are as follows,
Minimum Rs. 2,40,000/- per annum (Chennai, Pune, Bengaluru, Mumbai, and Delhi)
Minimum Rs. 1,80,000/- per annum (Other Indian cities)
The applicants need to submit appropriate proofs to complete the process of home loan documentation. Let's take a look at some of the tax benefits for an HUF.
What is the tax benefit of an HUF?
Forming an HUF is one of the most popular tax-saving exercises in India. An HUF is treated as a single tax-payer under Income Tax Act. The family business owned by a HUF is considered a separate tax entity from its members. It reduces the overall tax liability of the family.
The taxes work differently for an HUF than its individual members. Therefore, any deduction under Section 80 or exemption on tax according to laws can be claimed separately.
What you need to note is that in order to avail these benefits, you have to register your family as an HUF and have a legal deed. This deed should include all the details of every member of the family and their businesses. Lastly, PAN and a bank account should also be opened in the name of a Hindu Undivided Family.
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