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What Is a Hindu Undivided Family?

A Hindu Undivided Family, commonly called an HUF, is recognised as a separate taxable person under income-tax law. It is distinct from its Karta and individual members and can have its own PAN, bank account, assets, income, deductions and income-tax return.

An HUF is not created merely by signing a deed, applying for PAN or opening a bank account. It arises from family status under applicable Hindu personal law. Income-tax law recognises and taxes the HUF; it does not itself create the family relationship.

Which Income-tax Act Applies?

The applicable law depends on the period for which the income is being reported.

Formation of an HUF for Tax Purposes

Family status

An HUF arises through family status and not through a contract between unrelated persons. A partnership agreement or declaration between individuals cannot create an HUF where the required family relationship does not exist.

HUF corpus or property

For the HUF to earn separately taxable income, there must ordinarily be property, capital or a business belonging to the HUF. Common sources may include:

• Ancestral or joint family property;
• Property received on a valid partition of a larger HUF;
• Property bequeathed specifically to the HUF under a will;
• Gifts specifically made to the HUF;
• A business commenced with genuine HUF funds; and
• Income or investments accumulated from existing HUF property.

The source and ownership of the corpus should be supported by wills, gift documents, partition records, bank statements, title documents and accounting records.

HUF deed

An HUF deed is not what legally creates the HUF. However, a written declaration or deed can serve as useful evidence of:

• The name of the HUF;
• The Karta and coparceners;
• The family relationship;
• The source of the initial corpus;
• The date from which the HUF’s financial activities are recorded; and
• The authority of the Karta to operate bank and investment accounts.

Members, Coparceners and Karta

A member is a person belonging to the family unit. A coparcener has an interest in coparcenary property and may have the right to seek partition under applicable personal law.

Every coparcener is generally a member, but every member may not necessarily be a coparcener. A spouse, for example, may be a member of the HUF without acquiring coparcenary rights merely through marriage.

The Karta manages the HUF’s financial and tax affairs. The Karta ordinarily:

• Applies for the HUF’s PAN;
• Operates its bank accounts;
• Maintains records;
• Represents the HUF before tax authorities; and
• Verifies the HUF’s income-tax return.

How to Apply for an HUF PAN

An HUF requires a PAN separate from the PAN of its Karta or members.

Under Rule 158, an HUF PAN application must be accompanied by:

• An original affidavit by the Karta, authenticated by a Notary Public, Oath Commissioner or Judicial Magistrate;
• The name, father’s name, Aadhaar number or PAN, and address of all coparceners as on the application date; and
• The prescribed identity, address and date-of-birth document of the Karta.

After obtaining PAN, the HUF should ordinarily maintain:

• A bank account in the HUF’s name;
• Separate books and investment records;
• Documents showing the source of its corpus;
• TDS certificates issued under the HUF PAN; and
• Separate records from those of the Karta and members.

What Income Is Taxable in the Hands of the HUF?

Income may be assessed as HUF income when it genuinely arises from HUF-owned property, capital or business. Examples include:

• Rent from a property owned by the HUF;
• Interest on deposits made from HUF funds;
• Dividends and capital gains from HUF investments;
• Business income from a business owned by the HUF;
• Income from ancestral or joint family property; and
• Income earned by reinvesting existing HUF income.

The HUF’s income is computed separately under the applicable heads of income, such as house property, business or profession, capital gains and other sources.

Income that normally remains personal

The following should not be reported as HUF income merely because the person belongs to an HUF:

• Salary earned by a member from personal employment;
• Professional fees earned through the member’s personal skill;
• Income from assets owned personally by the member;
• Income from self-acquired property that has not genuinely become HUF property; and
• Income subject to the clubbing provisions.

Clubbing of Income when Personal Property Is Transferred to the HUF

A major restriction applies where an individual transfers or converts self-acquired property into HUF property without adequate consideration.

For FY 2025-26, section 64(2) of the Income-tax Act, 1961 applies. For Tax Year 2026-27, the corresponding provisions are sections 99(3) and 99(4) of the Income-tax Act, 2025.

Broadly:

• The asset may be recorded as HUF property.
• Income arising from that property is included in the individual transferor’s taxable income.
• The same income should not be taxed again in the HUF’s return.
• If the HUF is later partitioned, income from the portion allotted to the transferor’s spouse may continue to be clubbed with the transferor under the applicable provision.

Receiving a gift or asset without immediate gift taxation does not automatically establish that all future income will be taxable in the hands of the HUF.

Tax Rates Applicable to an HUF

An HUF is generally covered by the default new tax regime unless it validly opts for the old regime.

AY 2026-27: Default new tax regime

These rates continue under section 202 of the Income-tax Act, 2025 for Tax Year 2026-27.

AY 2026-27: Old tax regime

Health and Education Cess is charged at 4% of income tax and surcharge, where applicable.

The old regime may still be preferable where the HUF has substantial eligible deductions, losses or exemptions. The comparison should be made using the HUF’s actual income and deductions.

Opting for the Old Tax Regime

For AY 2026-27:

• An HUF without business or professional income can generally select the preferred regime in the income-tax return each year; and
• An HUF having business or professional income must comply with the prescribed option procedure, including filing Form 10-IEA within the applicable time where required.

Business-income taxpayers are subject to restrictions on changing repeatedly between the regimes. Options validly exercised under the earlier Act generally continue under the corresponding provisions of the 2025 Act because of section 536.

Partition of an HUF

Partition means division of the joint family property among the members or groups of members.

Total partition

A total partition generally involves division of:

• All properties of the HUF; and
• The interests of all members.

Where property is capable of physical division, merely dividing its income is not sufficient. Where physical division is not possible, the property must be divided to the extent it reasonably admits.

Partial partition

A partial partition may involve only some properties, only some members, or both.

Assessing Officer’s finding

A previously assessed HUF does not cease to be assessed merely because the family executes a partition deed or distributes income.

Under section 171 of the Income-tax Act, 1961 and section 315 of the Income-tax Act, 2025:

• A claim of partition must be examined by the Assessing Officer;
• Notice must be given to the members;
• The Assessing Officer records whether the partition was total or partial and its effective date;
• Income up to the date of partition is assessed in the hands of the HUF; and
• Members may be jointly and severally liable for the HUF’s tax relating to the pre-partition period.

Registration, stamp duty and title-transfer requirements for immovable property must also be examined separately under the applicable state laws.

Amount Received by a Member from the HUF

Under section 10(2) of the Income-tax Act, 1961, a sum received by a member out of the HUF’s income is generally exempt in the member’s hands because the underlying income is assessed in the HUF’s hands.

Under the Income-tax Act, 2025, this treatment is continued through section 11 read with Schedule III. The exemption does not override the clubbing provisions relating to personal property converted or transferred to the HUF.

Which ITR Form Should an HUF File?

For AY 2026-27, the applicable form generally depends on the nature of income.

Due Dates for AY 2026-27

The general due dates for FY 2025-26 are:

A belated or revised return for AY 2026-27 can generally be filed up to 31 December 2026 or before completion of assessment, whichever is earlier.

How to File an HUF Return in myITreturn

Documents an HUF Should Retain

An HUF should preserve:

• PAN application and Karta affidavit;
• HUF declaration or deed;
• Family tree and coparcener details;
• Documents proving the source of the corpus;
• Wills, gift deeds or partition documents;
• Property title records;
• HUF bank and demat statements;
• Books of account;
• TDS certificates and tax challans;
• Regime-option forms;
• Computation and filed ITR; and
• Orders or findings relating to partition.

Common Mistakes

Corresponding Provisions under Both Acts

The 2025 Act substantially reorganises and renumbers these provisions while continuing the principal tax treatment of HUFs.

Conclusion

An HUF can be separately taxed only where the family status, ownership of assets and source of income are supported by genuine facts and records. Obtaining a PAN or executing an HUF deed does not permit personal income to be shifted to the HUF.

The HUF should maintain separate financial records, examine clubbing provisions before reporting income, select the correct ITR and tax regime, and follow the statutory partition procedure where the family is divided. For AY 2026-27, filing continues under the Income-tax Act, 1961, while income earned from 1 April 2026 is governed by the Income-tax Act, 2025.