HUF Tax Trick: Save ₹2.5L Extra on Your Family Income?
A Hindu Undivided Family is a separate legal entity for tax. Salaried people with inherited property, family investments, or rental income can use an HUF to split income, claim a second basic exemption, and legally cut their total tax bill.
An HUF pays zero tax on its first ₹2.5L income — that's 1,389 cups of cutting chai you just saved.
Your HUF gets its own ₹2.5L tax-free basic exemption — separate from yours
Key Takeaways
Check if your family holds ancestral property, inherited land, or a family-run business — these are the valid sources of HUF corpus that make forming one worthwhile.
Apply for an HUF PAN card at your nearest NSDL/UTI centre or online via NSDL's e-TAN portal — you'll need a deed of declaration and basic KYC of the Karta (head of family).
Consult a SEBI-registered tax practitioner or CA to ensure you only route genuinely ancestral or gifted income into the HUF — incorrectly transferring salary income can attract IT Department scrutiny and penalties.
A Hindu Undivided Family is a separate legal entity for tax. Salaried people with inherited property, family investments, or rental income can use an HUF to split income, claim a second basic exemption, and legally cut their total tax bill.
Here's what happened: An HUF is a separate legal and tax entity recognised under the Hindu Succession Act — it gets its own PAN card and files an independent Income Tax Return every year.. The HUF enjoys its own basic exemption of ₹2.5 lakh (old regime) and can claim Section 80C deductions up to ₹1.5 lakh, entirely separate from the individual members' limits.. Income from ancestral property, inherited assets, or investments funded by gifts or inheritance can be routed through an HUF — reducing the total tax outgo for the family unit..
What you should do: Check if your family holds ancestral property, inherited land, or a family-run business — these are the valid sources of HUF corpus that make forming one worthwhile.. Apply for an HUF PAN card at your nearest NSDL/UTI centre or online via NSDL's e-TAN portal — you'll need a deed of declaration and basic KYC of the Karta (head of family).. Consult a SEBI-registered tax practitioner or CA to ensure you only route genuinely ancestral or gifted income into the HUF — incorrectly transferring salary income can attract IT Department scrutiny and penalties..
Pro tip: even a newly married couple can form an HUF the moment they receive a gift from relatives — that gifted amount becomes the HUF's seed capital, and all returns on it are taxed at HUF slab rates, not yours.
For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.
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- [1]“Hindu Undivided Family: Can salaried individuals lower tax through an HUF?” mint - money · 9 Aug 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.