Understanding Taxation: Individual vs. HUF Returns

When it comes to tax planning, creating a Hindu Undivided Family (HUF) entity can offer significant tax benefits for individuals. Let’s break down the differences in tax calculations for an individual’s return and an HUF’s return using the given table as an example.

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Particulars Individual’s Return (Before HUF Formation) Individual’s Return (After HUF Formation) HUF’s Return
A. Salary 20,00,000 20,00,000 –
B. House Property (HP) Rent 7,50,000 – 7,50,000
C. Standard Deduction on House Property (30%) (2,25,000) – (2,25,000)
D. Income from House Property (B – C) 5,25,000 – 5,25,000
E. Total Taxable Income (A + D) 25,25,000 20,00,000 5,25,000
F. Deductions under Section 80C 1,50,000 1,50,000 1,50,000
G. Net Taxable Income (E – F) 23,75,000 18,50,000 3,75,000
H. Tax Payable 5,46,000 3,82,200 6,500

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