Tax on HUF income (new regime).
HUF tax (incl 4% cess)
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Effective rate
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Your breakdown
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A second taxpayer that already exists in your family
A Hindu Undivided Family is one of the more underused planning tools in Indian tax. The law treats an HUF as a separate person under Section 2(31), with its own PAN, its own return, and its own set of slab rates. It is automatically formed in a Hindu, Jain, Sikh, or Buddhist family the moment a person marries, the family does not need to be created by deed. What it does need before it can earn and be taxed is a corpus, typically ancestral property, an ancestral business, gifts to the HUF, or a will that bequeaths assets to the family rather than to an individual. Once funded, income from those assets is taxed in the HUF, not clubbed with the karta’s salary.
How the slabs and rebate actually apply
This calculator runs HUF income through the new-regime slabs for FY 2025-26 (AY 2026-27): nil up to 4 lakh, 5% from 4 to 8 lakh, 10% from 8 to 12 lakh, rising to 30% above 24 lakh, plus the 4% health and education cess. Note the caveat printed under the result. The Section 87A rebate that makes income up to 12 lakh tax-free for individuals is shown for comparison, but an HUF cannot claim 87A on most of its income, because 87A is available only to a resident individual. Treat the rebate-applied figure as a best case and the no-rebate figure as the realistic one.
A worked example: splitting 8 lakh of rental income
Suppose ancestral property earns 8 lakh of taxable rent a year. If the karta adds it to his own salary, every rupee is taxed at his top slab, often 30%, costing 2.4 lakh plus cess. Routed through the HUF as a standalone 8 lakh, the slab math looks like this.
The family pays 20,800 instead of about 2.4 lakh. The bars below show the karta-slab cost against the HUF cost on the same 8 lakh.
Where families trip up
The single biggest mistake is funding the HUF with the karta’s own money and expecting the income to escape his tax. Clubbing provisions under Section 64(2) pull income from self-gifted assets straight back to the individual. Gifts from members are also watched: a gift above 50,000 from a non-member is taxable in the HUF, while reasonable gifts from members are exempt but can attract clubbing. The clean sources are genuinely ancestral assets, money received on partition, and gifts received by the HUF on occasions like a member’s wedding. A second error is letting the HUF lie dormant with a PAN but no real activity, which invites scrutiny rather than saving anything.
Which ITR form does an HUF file?
An HUF with only salary-type, house property, and other-source income up to the small-business thresholds usually files ITR-2; one running a business or profession files ITR-3. It cannot use ITR-1 (Sahaj), which is reserved for resident individuals. The due date is 31 July where no audit applies, 31 October where a tax audit is required.
Can the HUF claim Section 80C and 80D?
Under the old regime, yes. An HUF can claim 80C up to 1.5 lakh on, for example, LIC premiums for members or 5-year tax-saver deposits in the HUF’s name, and 80D for health insurance of members. Under the new regime these are gone, just as they are for individuals, so the HUF’s only shelter there is the wider slab band itself.