Income Tax for HUF —
A Second Tax Entity for Your Family
An HUF (Hindu Undivided Family) is taxed as a separate person with its own PAN, its own slabs and its own 87A rebate. Here is how the tax works, how to create one, and how to file its return for AY 2026-27.
An HUF is a separate assessable person under the Income-tax Act — distinct from its members. It has its own PAN and its own tax slabs, so genuine ancestral or HUF-corpus income is taxed apart from the members' personal income. Under the default new regime, an HUF pays nil tax on total income up to ₹12 lakh (Section 87A rebate); the old regime gives a ₹2.5 lakh basic exemption plus Chapter VI-A deductions. An HUF gets no age benefit and no standard deduction (it has no salary).
HUF Income Tax Slabs — New vs Old Regime
An HUF is taxed on exactly the same slab schedule as a resident individual, but without the senior/super-senior age benefit. The new regime is the default; the HUF may opt for the old regime each year (with a Form 10-IEA if it has business income).
| Total income (₹) | New regime (AY 2026-27) | Old regime |
|---|---|---|
| Up to 2,50,000 | Nil | Nil |
| 2,50,001 – 4,00,000 | Nil | 5% |
| 4,00,001 – 5,00,000 | 5% | 5% |
| 5,00,001 – 8,00,000 | 5% | 20% |
| 8,00,001 – 10,00,000 | 10% | 20% |
| 10,00,001 – 12,00,000 | 10% | 30% |
| 12,00,001 – 16,00,000 | 15% | 30% |
| 16,00,001 – 20,00,000 | 20% | 30% |
| 20,00,001 – 24,00,000 | 25% | 30% |
| Above 24,00,000 | 30% | 30% |
Add 4% health & education cess. Surcharge applies above ₹50L (capped at 25% under the new regime). Section 87A makes tax nil up to ₹12L (new) / ₹5L (old) for resident HUFs. HUF gets no ₹75,000 standard deduction as it earns no salary.
Because an HUF has its own basic exemption and its own 87A rebate, income parked in a genuine HUF is taxed independently of the Karta and members. A family that legitimately routes ancestral or corpus income through an HUF effectively gains one more full set of slabs and deductions.
HUF vs Individual — Tax Treatment
| Feature | Individual | HUF |
|---|---|---|
| Basic exemption (old regime) | ₹2.5L / ₹3L (senior) / ₹5L (super-senior) | ₹2.5L · no age benefit |
| Nil-tax income (new regime, 87A) | Up to ₹12L | Up to ₹12L |
| Standard deduction | ₹75,000 (new) / ₹50,000 (old) | Not available · no salary |
| Section 80C | ₹1.5L | ₹1.5L (own limit) |
| Section 80D (health insurance) | ₹25,000 / ₹50,000 (senior) | ₹25,000 on HUF members |
| PAN | Own PAN | Separate HUF PAN |
| ITR forms | ITR-1 to ITR-4 | ITR-2 / ITR-3 (no ITR-1) |
An HUF cannot file ITR-1 (Sahaj) or ITR-4 (Sugam); those are for individuals only.
How to Create an HUF for Tax Saving
Only Hindus, Sikhs, Jains and Buddhists can form an HUF. It comes into existence automatically on marriage, but to be assessed separately it needs a PAN and a bank account.
- An HUF needs at least two members; a coparcener (son, and since 2005 a daughter) can demand partition.
- The Karta is usually the senior-most member and manages the HUF; a female member can be Karta.
- Fund the HUF with ancestral/coparcenary property, an inheritance, or gifts from non-members — not by transferring your own salary or assets (that triggers clubbing).
Setting up an HUF and need its PAN, deed and first return handled?
Talk to a Tax Expert →How to File Income Tax Return for an HUF
The Karta files the return on behalf of the HUF using the HUF's PAN and the HUF's own login on the e-filing portal. The form depends on the nature of income:
| HUF income | Form | Notes |
|---|---|---|
| Rental, interest, one house, other sources | ITR-2 | No business income |
| Capital gains (property / shares) | ITR-2 | Report under CG schedule |
| Business / profession run as HUF | ITR-3 | With books / presumptive |
| ITR-1 / ITR-4 | Not allowed | For individuals only |
Due date: 15 September 2026 for AY 2026-27 (non-audit cases, extended from 31 July); audited HUFs by 31 October.
A tax audit applies if HUF business turnover exceeds ₹1 crore (₹10 crore where cash receipts/payments are ≤5%) or professional receipts exceed ₹50 lakh. Use the income tax calculator to estimate the liability before filing.
Deductions an HUF Can Claim
Under the old regime an HUF has its own Chapter VI-A limits, separate from every member. Most of these are switched off under the default new regime.
- Section 80C — ₹1.5L (PPF-HUF a/c, ELSS, NSC, 5-yr FD, LIC on a member)
- Section 80D — health insurance of HUF members
- Section 24(b) — home-loan interest on HUF property
- Section 80G — donations
- Section 80TTA — savings interest up to ₹10,000
- Sukanya Samriddhi / NPS — individual only (not HUF)
HUF Tax — ₹10 Lakh Rental Income
HUF · new regime (default)
HUF · old regime + 80C
For a modest-income HUF the new regime is usually nil-tax up to ₹12 lakh, so most families stay on the default. The old regime only wins when deductions are large. Compare both with the old vs new regime calculator.
Clubbing — When HUF Income Is Taxed Back on You
The tax saving works only if the income is genuinely the HUF's. If you feed your own assets into the HUF, the income is clubbed back to you:
- Self-acquired property converted to HUF property — the income keeps getting taxed in your hands (Section 64(2)).
- Gifts by a member to the HUF — the income on that gift is clubbed with the member; a gift above ₹50,000 from a non-relative HUF can also be taxable.
- Genuinely HUF income — ancestral property, inheritance, gifts from outsiders, and returns on the HUF's own corpus — is taxed in the HUF and not clubbed.
Routing your own salary or personal investments through the HUF does not save tax — clubbing provisions pull that income straight back to you, and a sham HUF invites scrutiny. Only ancestral/corpus income and outside gifts create a real second tax entity.
Want the clubbing position on your HUF checked before you file?
Ask a Tax Expert →What Happens to an HUF on Partition
An HUF ends by partition. For income tax only a total partition is recognised (Section 171) — a partial partition is ignored and the HUF continues to be assessed on that income.
- On total partition the HUF ceases; assets are distributed and each member files for their own share going forward.
- Distribution of HUF assets to members on partition is generally tax-neutral — the member inherits the HUF's original cost of acquisition.
- A notional partition done only to split income on paper is not accepted; a genuine division of assets is required.
HUF Income Tax — Frequently Asked Questions
Related TaxClue Services
Next in this income-tax cluster
Make Your HUF Work as a Second Tax Entity
From the HUF deed and PAN to regime selection, deductions and the annual ITR-2 / ITR-3, TaxClue's CA-led team sets up and files your HUF correctly — clubbing-safe and 100% online, across India.