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

For a Hindu Undivided Family (HUF), which statement is correct regarding its taxation as a separate assessee?

An HUF is taxed as a separate entity on its own income, and under the old tax regime it can claim deductions like Section 80C for eligible investments. It is not taxed in the Karta's hands or at a flat 30% rate.

  1. AAn HUF is not a separate taxable entity and its income is taxed in the Karta's hands
  2. BAn HUF is taxed as a separate entity, and under the old regime can claim deductions such as Section 80C on eligible investmentsCorrect
  3. CAn HUF cannot claim any deduction under Chapter VI-A
  4. DAn HUF is taxed at a flat 30% on all income

Explanation

An HUF is a distinct person under the Act and is assessed separately on its own income. Under the old regime it can claim Chapter VI-A deductions such as 80C for eligible investments made in its name. It is not taxed at a flat rate; slab rates apply, so the other statements are incorrect.

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