Tax · Free tool
HUF Tax Saving Calculator
A Hindu Undivided Family is a separate tax entity with its own ₹2.5 lakh exemption, PAN and slab rates. Useful when family has rental, business or capital-gains income you can route through it.
Rental income, ancestral business, capital gains from HUF assets.
Why an HUF saves tax
A Hindu Undivided Family is a separate tax assessee under section 2(31)(ii) with its own PAN, slab rates, ₹2.5 lakh basic exemption, ₹1.5 lakh 80C and ₹50,000 80TTA. Family income (rent, business profits, capital gains from ancestral assets) routed to the HUF is taxed in its hands, not the karta's — splitting income across two assessees keeps each in a lower slab.
Worked example
A karta earns ₹20 lakh salary and inherits an ancestral property giving ₹6 lakh annual rent. If the rent is added to his salary, top-slab 30% tax = ₹1,80,000. Route the same rent through HUF: HUF income ₹4,20,000 after 30% standard deduction; HUF tax (old regime, after 80C ₹1.5L investment) = ~₹13,500. Net saving ≈ ₹1.66 lakh/year. Over 20 years that's ₹33 lakh.
When to use this
- Inherited ancestral property generating rental income
- Family business profits previously taxed in karta's hands
- Karta in 30% slab — biggest marginal benefit
- Wedding gifts to son/daughter — receivable by HUF tax-free
HUF cannot be formed for own-earned salary income — only ancestral or gifted assets count. New regime (115BAC) doesn't allow 80C/80D for HUF either, so weigh old vs new with our old vs new tax regime calculator.
FAQ
How do I form an HUF?
You don't need to register — HUF arises automatically with marriage (Hindu, Sikh, Jain, Buddhist). Apply for a separate PAN in the HUF's name (Form 49A → PAN issued in 1-2 weeks). Open a separate HUF bank account.
What income can the HUF earn?
Ancestral property income, rental from HUF-owned property, business carried in HUF's name, gifts from non-relatives (up to ₹50k tax-free), capital gains from HUF assets. Personal salary cannot be transferred — clubbing applies.
Can the HUF claim 80C / 80D?
Yes — HUF is a separate assessee. It gets its own ₹1.5L 80C cap. Investments must be in HUF's name (PPF, ELSS, NSC, life insurance for any member).