HUF explained: How this unique tax tool can help families save more tax

At its core, an HUF is a family arrangement consisting of lineal descendants from a common ancestor, including their spouses. It applies to Hindus, as well as Jains, Sikhs and Buddhists. Importantly, an HUF is recognised as a separate “person” under the Income Tax Act, which means it can have its own PAN, file tax returns, and claim deductions independently.