Introduction
A taxpayer who has HUF registration or wishes to obtain HUF registration/HUF PAN card should first know what the income tax slab for HUF is. Since HUF has a separate PAN card, the tax on income earned by HUF is also calculated separately from the income of its Karta. A separate income tax return (ITR) is submitted for the HUF. The greatest advantage in this situation is that the income tax slab set for an individual is likewise relevant for the HUF. The primary goal of HUF registration is to save income tax. In the present day, numerous individuals generate earnings from various sources and seek to minimize the taxes on their income. For instance, an individual receives an income tax slab for HUF from their salary while employed in an office, but concurrently, they are also generating income from the stock market, rental properties, or bank interest. In this scenario, they must pay taxes on the earnings obtained from every source. In this scenario, HUF registration is a favorable choice. Since HUF is not eligible to receive a salary, one can obtain HUF registration and transfer the income earned from other sources through HUF and reduce their income tax. This is feasible because, according to the income tax slab for HUF, a specific amount has been determined for which an exemption is granted; if the person’s or HUF’s income does not exceed that amount, they qualify to pay no income tax slab for HUF.
Income Tax Regime for HUF
According to the Finance Act, taxpayers can select either the old or the new tax regime according to their preference when submitting their income tax return (ITR). The income tax slabs and income tax rates of both tax regimes are different from each other. Therefore, the taxpayer is free to choose the tax regime in which the tax savings are higher. Although the New Tax Regime is selected by default when the income tax return is filed, if a taxpayer believes they can reduce their tax liability by opting for the old regime, they have the option to switch to it. Nonetheless, tax specialists predict that the government is advancing the new tax regime, and the old tax regime is anticipated to be eliminated in a few years.
The Union Budget for the Tax Year 2025-2026 was presented on 1st February 2025 by the Hon’ble Finance Minister Smt. Nirmala Sitharaman. In it, numerous alterations have been implemented in the income tax slab for HUF and rates following the new tax regime, drawing significant attention from taxpayers. Simultaneously, no alterations have been observed in the old tax regime.
Income Tax Slab for HUF: Income from House Property, Business, and Other Sources.
Let us examine the income tax slab for HUF under each tax regime separately.
Income Tax Slab for HUF (Old Regime)
| Income Tax Old Slab (₹) | Income Tax Rate (%) | Surcharge |
| ₹ 0 – ₹ 2.5 Lakh | NIL | NIL |
| ₹ 2.5 Lakh – ₹ 5 Lakh | 5% | NIL |
| ₹ 5 Lakh – ₹ 10 Lakh | 20% | NIL |
| ₹ 10 Lakh – ₹ 50 Lakh | 30% | NIL |
| ₹ 50 Lakh – ₹ 1 Crore | 30% | 10% |
| ₹ 1 Crore – ₹ 2 Crore | 30% | 15% |
| ₹ 2 Crore – ₹ 5 Crore | 30% | 25% |
| ₹ 2 Crore – ₹ 5 Crore | 30% | 37% |
If an HUF opts for the old regime while filing an income tax return (ITR), then it is free to avail itself of the following deductions.
Rebate u/s 87A: Exemption is available if the taxable income of the HUF is up to ₹5,00,000. A maximum exemption of ₹12,500 under u/s 87A means no tax liability on income up to ₹5,00,000.
Section 24A: An HUF can claim a standard deduction of 30% on rental income received from residential properties. This deduction is to cover maintenance and repair costs, thereby reducing taxable income.
Section 24(b): An HUF is allowed to claim a maximum deduction of ₹2 lakh towards interest paid on its home loan from its income, provided the construction of the house is completed within five years.
Section 80C: If HUF invests in various financial assets like PPF, NSC, ELSS, Housing loan principal etc., then it can claim a deduction up to Rs 1.5 lakh, which will reduce the tax liability.
Section 80D: HUF is allowed to claim a maximum deduction of Rs. 25,000 towards health insurance premium.
Section 80G: If the HUF wants to claim a deduction for the donated amount in income tax, then it must be ensured that the trust or institution receiving the donation is registered with the income tax department and that the registration number is valid at the time of donation. A 100% deduction can be claimed for donations made to government funds, schemes, and political parties, whereas a 50% deduction can be claimed for private and public registered trusts.
Section 80TTA: HUF is allowed to claim a maximum deduction of Rs. 10,000 towards interest on savings bank accounts.
Income Tax Slab for HUF (New Regime)
| Income Tax New Slab (₹) | Income Tax Rate (%) | Surcharge |
| ₹ 0 – ₹ 4 Lakh | NIL | NIL |
| ₹ 4 Lakh – ₹ 8 Lakh | 5% | NIL |
| ₹ 8 Lakh – ₹ 12 Lakh | 10% | NIL |
| ₹ 12 Lakh – ₹ 16 Lakh | 15% | NIL |
| ₹ 16 Lakh – ₹ 20 Lakh | 20% | NIL |
| ₹ 20 Lakh – ₹ 24 Lakh | 25% | NIL |
| ₹ 24 Lakh – ₹ 50 Lakh | 30% | NIL |
| ₹ 50 Lakh – ₹ 1 Crore | 30% | 10% |
| ₹ 1 Crore – ₹ 2 Crore | 30% | 15% |
| ₹ 2 Crore – ₹ 5 Crore | 30% | 25% |
| ₹ 2 Crore – ₹ 5 Crore | 30% | 37% |
Rebate u/s 87A: Exemption is available if the taxable income tax slab of HUF is up to ₹12,00,000. The maximum exemption of ₹60,000 under u/s 87A means no tax liability on income up to ₹12,00,000.
Section 24A: HUF can claim a standard deduction of 30% on rental income received from residential properties. This deduction is to cover maintenance and repair costs, thereby reducing taxable income.
Section 24(b): HUF is allowed to claim a maximum deduction of ₹2 lakh towards interest paid on its home loan from its income tax Slab for HUF, provided the construction of the house is completed within five years.
Income Tax Slab for HUF: Income from Capital Gain
The profit on the sale of assets is called capital gains. It includes land, jewellery, cryptocurrencies, cars, machines, shares, etc., whose value increases during the holding period, and hence a profit is obtained when they are sold.
Capital gains can be either short-term or long-term.
Short-Term Capital Gain (STCG):
- If the HUF sells any land or building within 24 months of purchase, then the profit earned on it comes under the category of short-term capital gain. Tax on this profit will be calculated as per the income tax slab for HUF.
- If the HUF sells any equity, bonds, debentures, or mutual funds within 12 months of purchase, then the profit earned on it comes under the category of short-term capital gain. A 20% tax will be paid on this profit.
Long-Term Capital Gain (LTCG):
- If an HUF sells any land or building after 24 months of purchase, then the profit earned on it comes under the category of long-term capital gain. A 12.5% tax without indexation will be paid on this profit.
Exemption: If the HUF invests the profit or excess amount payable on the sold property in purchasing another property, it can avoid paying tax. Alternatively, the HUF can invest the profit from the sale of its first property, up to Rs 50 lakh, in bonds of NHAI, REC, PFC, or IRFC.
- If an HUF sells any equity, bonds, debentures, or mutual funds after 12 months of purchase, then the profit earned on it comes under the category of long-term capital gain. A 12.5% tax will be paid on this profit.
Exemption: HUF short-term profit of up to Rs 1.25 lakh, which it earns from the stock market, will be considered tax-free.
Income Tax Return (ITR) for HUF:
HUF can choose the Income Tax Return (ITR) form as per the income it earns.
ITR – 2
- Income from House Property
- Income from other sources
- Income from Capital Gain
- Income from Crypto
- Foreign Asset/Income
ITR – 3
- Every income from ITR-2
- Income from Business/Profession
ITR – 4
- Income from House Property
- Income from other sources
- Presumptive Income
We hope our article provides you with information regarding the income tax slab for HUF. You can reach out to E-Tax World for HUF registration online process, HUF deed, HUF benefits and all information related to HUF.