Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
A separate taxpayer
An HUF is recognised as a distinct taxable entity — separate from its individual members. It has its own PAN, files its own return, and gets its own basic exemption and slab rates, just like an individual. The family’s karta (typically the senior-most member) manages it.
How it saves tax
The saving comes from income splitting: income that genuinely belongs to the family unit (ancestral property, or assets gifted/inherited into the HUF) is taxed in the HUF’s hands, using its separate exemption and lower slabs — rather than being piled onto a member’s personal income at a higher rate. Deductions like 80C are also separately available to the HUF. Income you earn personally cannot simply be diverted into the HUF — sourcing matters.
A worked example
Example: a family owns an ancestral property earning ₹6 lakh rent. Held in the HUF, that rent is taxed with the HUF’s own exemption and slabs — potentially saving tax versus adding it to the father’s already-high income. The HUF can also invest and claim its own 80C. But the income must legitimately belong to the HUF. Our team can assess whether an HUF helps your family.