One of the most important reasons for forming a HUF is to get additional tax advantages. HUF can only be formed by either a Hindu, Buddhist, Sikh or Jain family.
The term HUF stands for ‘Hindu Undivided Family’ and comprises of all successors of a common male ancestor and includes their wives and unmarried daughters.
A HUF Consists of a Karta, coparceners and members.
Karta manages the entire business and makes the final decision. Normally, the eldest member (Male or Female) of the family takes the position of Karta.
A HUF, as such, can consist of a very large number of members including female members as well as distant blood relatives in the male line.
However, out of this, coparceners are only those males and females who are within 4 degrees of the lineal descendent from the common male ancestor. The relevance of the concept of the coparcener is that only coparceners can ask for partition in property. The other family members; i.e., other than coparceners in the HUF, have no direct claim over HUF property, but can claim only through the coparceners.
The term ‘Hindu Undivided Family’ (HUF) is governed by the Hindu Law. It is not possible to create a HUF by an agreement between two parties, nor can it be formed by a group of people who do not constitute family.
The HUF even continues to exist after the death of the common ancestor, and the next eldest male or female member becomes the head of the family and is known as “Karta”.
By creating HUF, you can save taxes by creating a family unit and pooling in assets, since HUF is taxed separately. Income of a HUF is assessed in the hands of the HUF alone and not in the hands of any of its coparceners or members.
Step 1: Create HUF deed
HUF deed is a written formal document on a stamp paper stating the names of Karta (Eldest member of the family) and the Coparceners (Family Members). The name of the HUF is the name of the Karta followed by HUF.
Step 2: Apply for PAN & TAN
Step 3: Open Bank Account
By following the steps listed below, you can start your own Company,
The senior-most male member of the family is called the Karta. He heads the HUF.
Until January 2016, a woman could not be the HUF Karta. But in a landmark case, the Delhi High Court ruled in favour of a female being the Karta of a HUF.
All the members of the Karta family can be members of the HUF. The male members are called coparceners, while the females are referred to as just members. The difference between the two is that any of the coparceners can demand partition of the HUF.
In case the control and management of the HUF are situated outside India, the HUF would be a non-resident.
The residential status of a HUF is determined not on the basis of where the Karta resides but on the basis of where the HUF is managed from.
Yes. However, the member and the HUF cannot claim a deduction in respect of the same investment made or expense incurred.
No HUF arises only from status.
It is the property, which a man inherits from any of his three immediate male ancestors, i.e., father, grandfather, and great-grandfather.
A son in the womb of his mother at the time of partition;
No. A single person cannot constitute HUF. There has to be minimum two members to constitute a HUF.
ICI provides HUF services all across India. You can obtain HUF in Ahmedabad, Mumbai, Pune, Bangalore, Chennai, Delhi, Kolkata, Kanpur, Nagpur, Jaipur, or any other cities easily with us.