Income Tax Filing for HUF: A Hidden Route to Big Savings?

Most families know they can save tax as individuals — but did you know that you can claim separate benefits and exemptions by filing income tax under a Hindu Undivided Family (HUF)? It's one of the most underused tools in the Indian tax system.

In this blog, we will break down how to file income tax return for HUF, which form to choose, what income can be declared, and what deadlines you must keep in mind.

Who Can Form a HUF?

A HUF can be created by any Hindu, Sikh, Jain, or Buddhist family. It automatically comes into existence after marriage and can become stronger legally once a child is born. It is recognized as a separate entity under the Income Tax Act and gets its own PAN, bank account, and ITR.

So, if you have a joint family setup, you can form a HUF without a deed. However, for income tax benefits, a written declaration (HUF Deed) & PAN are necessary.

Which ITR Form Should a HUF File?

Understanding the correct form is critical to avoid scrutiny:

• ITR-1 is not applicable for HUF
• ITR-2 cannot be filed by any individual or HUF earning business income
• ITR-4 (Sugam) can be used by Resident Individuals/HUF/Partnership firms (other than LLP) opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE
• ITR-3 is used when HUF earns business or professional income (like F&O or intraday trading)

✅ So, ITR-4 can be filed by a Resident individuals / HUF / Partnership only if the income is within limits & falls under the presumptive scheme. Otherwise, ITR-3 applies.

ITR Filing Deadlines for HUF in FY 2024–25

• Non-audited HUFs: July 31, 2025
• Audited HUFs: October 31, 2025
• However, in case of extended dates, always check official notifications.

If the HUF has foreign assets, income above ₹50 lakh, or audit applicability, deadlines may differ.

What Kind of Income Can a HUF Earn?

A HUF can earn passive income, such as:

• Rental income from family property
• Capital gains from investments
• Interest on FDs or savings
• Dividend income

But it cannot earn income from personal efforts like salary, freelancing, or commission. Such earnings must be declared under the individual member’s ITR.

Also Read: Tax Audit Triggered? Here’s What Can Put You Under the Scanner in FY 2024–25

Can a HUF Trade or Invest in Stocks?

Yes. A HUF can:

• Open a Demat & Trading Account
• Invest in stocks, mutual funds, bonds
• Apply for IPOs separately

If trading is occasional (capital gains), file ITR-2. If frequent (like F&O), use ITR-3. Tax is paid separately in HUF’s name."

How to Create a HUF: Step-by-Step Process

1. Draft a HUF Deed on stamp paper with family members’ names and Karta
2. Apply for PAN Card in HUF’s name
3. Open Bank Account in HUF’s name (Karta as signatory)
4. Open Demat Account for stock market investment
5. Register for GST if doing business

All documentation should be properly maintained in case of audit.

How to Bring Assets into HUF?

• Ancestral property is naturally considered part of HUF
• Gifts from family members are tax-free under Section 56(2)
• Gifts from outsiders above ₹50,000 become taxable

Maintain gift deeds, bank entries, & documentary proof to stay compliant.

Common Mistakes to Avoid While Filing HUF ITR

• Using wrong ITR form
• Mixing personal and HUF income
• Not maintaining documentation
• Not filing returns even if income is below taxable limit — remember, filing builds a record

Key Compliance Notes

• Returns and Forms Applicable for Hindu Undivided Family (HUF) depend on income type
• ITR-1 to ITR-4 applies to individuals and HUFs, but not all are applicable to all income types
• HUF must file an ITR independently and cannot club it with individual returns
• If audit is applicable, filing after September 15 for unaudited & October 31 for audited HUFs is allowed

How CallMyCA Helps You File HUF Returns

Whether it’s choosing the right form or creating a HUF structure, CallMyCA makes it easy:

✅ Draft your HUF Deed with expert help
✅ Apply for HUF PAN and set up accounts
✅ File the right ITR on time with audit support
✅ Get answers to queries & avoid penalties

Also Read: Hidden Home Loan Tax Benefits Every Taxpayer Should

FAQs on HUF and ITR Filing

1. Can HUF file ITR-1?
   No, ITR-1 is not applicable for HUF.
2. What is the deadline for HUF ITR filing?
   Standard ITR Filing Deadline (Non-audited HUFs): July 31, or October 31 if audited.
3. Can HUF earn salary income?
   No, only passive income is allowed.
4. Is audit mandatory for HUF?
   If turnover crosses ₹1 crore (business) or ₹50 lakh (profession), yes.
5. Can HUF invest in mutual funds or stocks?
   Yes, using HUF PAN & bank account.
6. Can HUF be a Director or Partner in a firm?
   No, but Karta can represent HUF in personal capacity."

Conclusion

If done right, HUF can become a game-changer for family tax planning — multiple ITRs, multiple exemptions, and reduced tax liability. But wrong form or lack of documentation can trigger notices.

Let CallMyCA help you do it the right way — smartly, legally, and on time.

Need help with HUF ITR filing or setup? Get expert assistance on CallMyCA.com