ITR Filing — HUF

An HUF is a separate assessable entity under Section 2(31) — it has its own PAN, files ITR-2 (no business income) or ITR-3 (business income), and is taxed at individual slab rates including the ₹3 lakh basic exemption (new regime) or ₹2.5 lakh (old regime). A coparcener's share of HUF income is exempt in their hands under Section 10(2).

HUF income commonly includes: rental income from ancestral property, interest from HUF bank accounts, income from HUF investments, and share of profit from a partnership firm where the HUF is a partner. Section 10(2) exempts the coparcener's share of profit from HUF income in the coparcener's individual return — preventing double taxation.

An HUF comes into existence by operation of law on marriage — no formal deed is required. However, for a PAN or bank account, an HUF deed declaring the karta, coparceners, and initial corpus is needed. Gifts from coparceners to the HUF are not taxable under Section 56(2)(x) — they are within the family unit and exempt as family gifts.

An HUF can claim Section 80C (up to ₹1.5 lakh — LIC premium on member's life, NSC, PPF in member's name, ELSS), Section 80D (mediclaim for members — up to ₹25,000 or ₹50,000 for senior citizens), and Section 24(b) (housing loan interest up to ₹2 lakh for HUF-owned self-occupied property). HUFs cannot claim Section 80CCD(1B) — that is only for individuals.

Section 171 of the Income Tax Act governs partition. On total partition, the HUF ceases and the AO must be notified within 30 days. Tax up to the date of partition is the HUF's liability — coparceners are jointly and severally liable under Section 171(7). Partial partition is not recognised for income tax since 1980 — the entire family continues to be assessed as a unit.