The Hindu Undivided Family has been one of India's most-used wealth structuring tools for decades. With the new tax regime now default for HUFs too, families are asking: is the HUF still worth maintaining?
The honest answer is — it depends on what you're using it for. Let's break it down visually.
HUF Under the New Tax Regime — AY 2026-27
What changed
Basic exemption limit₹4 Lakh
Slabs same as individualsYes
New regime is defaultYes — opt-out available
Section 80TTB (senior citizen interest deduction)Not available to HUF
Can still file separately from membersYes
Income-splitting benefitReduced but present
What an HUF Is Actually Good For — In Plain Terms
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Holding ancestral property and assets
Property inherited through generations naturally belongs to the HUF. This is still the cleanest way to hold and manage such assets jointly.
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A separate taxable entity for rental or investment income
Income from ancestral property or HUF investments is taxed separately from individual members — still a genuine, if smaller, planning benefit under the new slabs.
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Income splitting across a family
With both individual and HUF slabs now aligned, the splitting benefit is smaller than it was — but a separate ₹4 lakh exemption and separate slab progression still has value for larger families.
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Section 80TTB benefits
The senior citizen interest income deduction is not available to HUFs — only to individuals. If this was part of your HUF's planning, it no longer applies.
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New vs old regime choice
HUFs can still opt for the old regime with deductions if it works out better — but this needs to be evaluated annually, as the comparison has changed under the new framework.
HUF vs Private Family Trust — The 2026 Comparison
HUF
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Simple to operate — no separate deed required~
Membership is automatic by birth — cannot be customised~
Karta has wide powers — can create governance ambiguity~
Cannot exclude specific family members from benefit~
Partition can trigger disputes if not planned
VS
Private Family Trust
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Fully customisable — defined by trust deed✓
Beneficiaries and terms chosen deliberately✓
Trustees have defined, documented duties✓
Can include or exclude specific individuals✓
Succession terms built in from day one
The Decision Framework
1
Already have an HUF with ancestral property?
Keep it. The HUF remains the natural and simplest vehicle for ancestral assets — don't dismantle what is already working.
2
Considering creating a new HUF purely for tax splitting?
Run the numbers under the new regime first. The benefit is smaller than it used to be — make sure it justifies the compliance effort.
3
Planning succession across multiple generations?
A private trust alongside the HUF often makes sense — the trust handles the governance and succession the HUF structure cannot.
4
Unsure what your HUF currently holds or how it's taxed?
This is more common than families realise. A CA-led review of your HUF's current position is the right first step before any decision.
The HUF is not obsolete. But it is no longer a default "set it up and forget it" tool. Under the 2026 tax framework, every family with an HUF should review whether it is still doing the job it was created for.
— CA Rahul Singla, VP Tax & Estate Planning, NextGen Family Office Services
Not Sure What Your HUF Is Doing for You Anymore?
We will review your HUF's current structure, holdings, and tax position — and tell you honestly whether it still makes sense, needs restructuring, or should be supplemented with a trust.
Request an HUF Review →