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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Caselet: A resident Hindu Undivided Family (HUF) of Mr. Sunil Gupta earns Rs 4,00,000 from rent of an inherited property. Which statement about the HUF's taxation is correct?

An HUF is a separate taxable person under the Income-tax Act, with its own PAN, and is assessed on its own income. Rent from inherited property belongs to the HUF and is not automatically clubbed with the Karta, nor exempt.

  1. AThe HUF is a separate taxable entity assessed as a distinct personCorrect
  2. BIts income is always clubbed with the Karta's income
  3. CIt cannot have a PAN
  4. DIt is exempt from tax for a joint family

Explanation

An HUF is a separate person under the Income-tax Act and is assessed on its own income, with its own PAN. Clubbing applies only in specific cases, such as income from assets converted from an individual's property. Income from inherited property is the HUF's own, and no exemption applies.

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