A Hindu Undivided Family (HUF) is a legal and taxation entity defined particularly by Indian law, mainly for Hindu, Sikh, Jain, and Buddhist families. With the formation of an HUF, the families are able to hold their assets, earn income, and pay tax in another PAN, rendering them a separate taxpayer entity from their individual members.

This structure allows for a range of tax-saving planning strategies, allowing families to legally split income, double exemptions, and claim maximized deductions—typically saving up to ₹2–₹7 lakhs in taxes annually. The ability of the HUF to claim its own deductions, receive tax-free gifts, and invest in tax-reducing plans makes this a very effective method of reducing the family's overall tax burden while remaining in complete tax compliance.

HUF Tax Slab 2025: Same as Individuals

The HUF (Hindu Undivided Family) tax slab for 2025 is the same as that for individual taxpayers in India. This means that the HUF enjoys the same basic exemption limit and progressive tax rates applicable to individuals.

How Tax-free income in HUF

Income tax-free in HUF" refers to income which HUF is legally entitled to receive or earn up to a certain amount or by way of certain transactions without paying tax on it under exemptions, deductions, and certain special provisions for gifts and investments see details.

These are the key ways an HUF can gain from tax-free income:

• Basic Exemption Limit: Similar to individuals, an HUF is also eligible for a basic exemption limit—up to ₹2.5 lakh under the old tax regime and up to ₹3 lakh in the new regime—on its overall income. Anything under this limit is tax-free for the HUF.
• Tax-Free Gifts: An HUF can receive gifts worth up to ₹50,000 in a financial year free of tax. Even bigger gifts or property transfers are possible without tax liability if properly structured, like a father giving property or cash to his son's HUF (not the son personally).
• Deductions and Exemptions: The HUF is eligible to claim several deductions under sections such as 80C, 80D, and 80G (investment, health insurance, and donation) and exemptions under sections such as 54 and 54F for capital gains, thereby lowering its tax base income and, in certain situations, making certain incomes practically free of tax after deductions
• Tax-Free Investments: The HUF corpus can be invested in tax-free vehicles like tax-free bonds or equity-linked savings schemes (ELSS), which can yield either tax-free or lower- taxed returns

HUF Income Tax Filing: How to File

HUF income tax filing is similar to individual tax filing, but remember these points:

• You need a separate PAN and bank account for the HUF.
• File a separate ITR for the HUF.
• If the HUF has business or professional income, file ITR-3; for other income (rent, investments), file ITR-2.

HUF and Section 54: How to Save Tax on Property Sale

When a Hindu Undivided Family (HUF) sells a residential property, it may face long-term capital gains (LTCG) taxes. However, Section 54 of the Income Tax Act can help the HUF save taxes on these gains if it reinvests the proceeds in a new residential property.

Who Can Claim?:HUFs are eligible for the exemption under Section 54, similar to individuals.

When is it Applicable?:When the HUF sells a long-term residential property (held for more than 24 months).

The HUF must buy a new residential property within:

• 1 year before or 2 years after the sale of the original property.
• Alternatively, it can construct a house within 3 years after the sale.
• The new property must be located in India.
• The HUF must hold the new property for at least 3 years to retain the exemption.