What is a HUF and how does it save tax?
A Hindu Undivided Family (HUF) is a separate tax entity formed automatically in a Hindu, Sikh, Jain or Buddhist family. It has its own PAN and gets its own basic exemption limit and deductions (80C, 80D, etc.) — so a family can split income across the individual and the HUF to legally reduce total tax.
1How it works
The HUF is taxed separately from its members. Income from ancestral property, a family business, or assets gifted to the HUF is assessed in the HUF's hands, with its own ₹2.5 lakh exemption (old regime) and 80C/80D deductions.
2Setting it up and limits
Create a HUF deed, get a HUF PAN and open a bank account. Note: you can't simply transfer your personal salary to the HUF to avoid tax (clubbing provisions apply), and partition of a HUF has its own rules.
Frequently asked questions
Can a HUF claim 80C and 80D deductions separately?
Yes — a HUF is a separate assessee and can claim its own 80C (₹1.5 lakh) and 80D deductions, on top of what the individual members claim. This is the core tax-saving benefit.
Related reading
← All answers · ❓ Q&A · 🧮 Free tools · 🇮🇳 हिंदी
General information for AY 2026-27, not professional advice. Laws change with each Finance Act, notification or amendment and depend on your specific facts — verify the current position with a licensed CA or advocate before acting.