Can forming a HUF help you save tax? Experts explain who can create one, key benefits and what to consider

A Hindu Undivided Family (HUF) is a separate taxable entity under income tax law with its own PAN and ITR.

HUFs can be formed by Hindu, Buddhist, Sikh, and Jain families, typically after marriage.

An HUF must have its own income and assets, such as from a family business, inherited property, rental income, investments, or eligible gifts.

A salaried person cannot divert their salary to an HUF; it is always taxed in the individual’s hands.

HUFs benefit from a separate basic exemption limit and can claim deductions, enabling legal income distribution among family members.