Income Tax Exemption for Amounts Received from a Hindu Undivided Family

An individual receiving a qualifying distribution from a Hindu Undivided Family (HUF) can exclude the amount from personal taxable income. The applicable provision depends on the tax year: section 10(2) of the Income-tax Act, 1961, for earlier years, and section 11 read with Schedule III of the Income-tax Act, 2025, from 1 April 2026.

Who can claim the exemption?

Law applicable from 1 April 2026

Section 11, read with Schedule III, Table, serial number 1, of the Income-tax Act, 2025 excludes a qualifying sum received by an individual as a member of an HUF from the individual's total income. The sum must be paid out of the income of the family or, for an impartible estate, the income of the estate belonging to the family. The exclusion does not apply to sums covered by section 99(3) and (4), which concern specified clubbing consequences.

Read the official Income-tax Act, 2025, as amended, particularly section 11, Schedule III and section 99.

Section 10(2) of the Income-tax Act, 1961

For tax years governed by the 1961 Act, section 10(2) excludes from an individual's total income a sum received as a member of an HUF where the sum was paid out of the family's income. It also covers a payment out of the income of an impartible estate belonging to the family. The exclusion is expressly subject to section 64(2).

Section 64(2) addresses an individual who converts separate property into HUF property, or transfers it to the HUF otherwise than for adequate consideration, in specified circumstances. Income arising from such converted property may be included in the individual's own taxable income rather than treated as HUF income for this purpose.

Official references: section 10 and section 64.

Conditions for claiming the exclusion

1. The recipient must be an individual receiving the amount in the capacity of a member of the HUF.
2. The payment must come from income belonging to the HUF, or income of an impartible family estate where applicable.
3. The relevant clubbing provisions must not require the income to be assessed in the hands of the individual.
4. Records should substantiate the source and nature of the payment, including the HUF's accounts and distribution details.

Illustrative example

Suppose an HUF earns rental income from ancestral property and distributes Rs. 2,00,000 of its income to a member. If the distribution satisfies the statutory conditions and the clubbing provisions do not apply, the Rs. 2,00,000 is excluded from that member's taxable income. The HUF's own tax liability is determined separately under the applicable law.

Frequently asked questions

Is every payment from an HUF tax-free?

No. The statutory exclusion applies to qualifying amounts paid from family income or the income of an impartible family estate. Other receipts, capital distributions, loans and property transfers require separate examination of their legal character and applicable provisions.

Does an HUF member have to pay tax again on distributed HUF income?

Ordinarily, a qualifying distribution covered by the exclusion is not included again in the member's total income. This does not remove the HUF's separate tax obligations.

Does the exemption continue under the 2025 Act?

Yes. The corresponding exclusion appears in section 11 read with Schedule III, Table, serial number 1, subject to the conditions stated there.

Official resources

Consult the Income Tax Department's guidance on the new Act and the official text of the Income-tax Act, 2025 for further details.

Updated: 10 October 2026. This article provides general information; individual facts and the applicable tax year determine the final tax treatment.