HUF Registration

Create HUF effortlessly: Share documents, professionals handle the rest.

What is HUF?

The term HUF stands for ‘Hindu Undivided Family’ and comprises of all descendants of a common male ancestor and includes their wives and unmarried daughters. The term of HUF is not defined in income tax law; it is defined under the Hindu Law as a family.

The family continues to exist even after the death of the common ancestor and the next eldest male member becomes the head of the family or the “Karta”. In financial terms, we can call him ‘manager of the family’. Even on the death of all the male members, the HUF continues to exist.

The term ‘Hindu Undivided Family’ (HUF) is defined under Hindu Law. so it can’t be created by an agreement between two parties, nor can it be formed by a group of people who do not constitute the family. Buddhists, Jains, and Sikhs can also form HUF.

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Conditions to be fulfilled to create an HUF

  • HUF should only be formed by a family.

  • HUF is automatically created for newly added member of the family at the time of their marriage.

  • HUF in general consists of a common anscentor and all of his descentors including their dughters and wives,

  • Buddhists, Jains, Hindus and sikhs are able to form HUF.

  • HUF often has assets which come as will, gift or ancentral property,

  • Once the HUF is created, the bank account should be created in the name of the HUF. A PAN number will be generated in the name of HUF.

HUF under Income tax Act

An HUF is recognized as a separate assessable entity under the Act. Its income may be assessed if following two conditions are satisfied:

  • There should be a coparcenership. In this connection, it is worthwhile to mention that once a joint family income is assessed as that of HUF, it continues to be assessed as such in subsequent assessment years till partition is claimed by coparceners.

  • There should be a joint family property which consists of ancestral property, property acquired with the aid of ancestral property and property transferred by its members. It is managed by Karta.

How is HUF taxed?

  • HUF has its own PAN and files a separate tax return. A separate joint hindu family business is created since it has an entity separate from its members.

  • Deductions under section 80 and other exemptions can be claimed by the HUF in its income tax return.

  • HUF can take an insurance policy on the life of its members.

  • HUF can pay salary to its members if they are contributing to its functioning and work of the joint hindu family business. This salary expense can be deducted from the income of HUF.

  • Investments can be made from HUF?s income. Any returns from these investments are taxable in the hands of the HUF

  • An HUF is taxed at the same rates as an individual.

How to save tax by forming an HUF?

An HUF is taxed separately from its members. Therefore, deductions (such as under section 80) or exemptions allowed under the tax laws can be claimed by it separately. For example, if you and your spouse along with your 2 children decide to create an HUF, all the 4 of you as well as the HUF can claim deduction for section 80C. HUF is usually used by families as a means to build assets.

What is HUF Karta?

The head of the HUF is called the Karta, which is the senior-most male member of the family.

Can a woman be HUF Karta?

Yes! Until January 2016, a woman could not be the HUF Karta. But in a landmark Expert'se, the Delhi High Court ruled in favour of a female being the Karta of an HUF. However, the same has not been incorporated in the Income Tax Act as yet.

Who are HUF coparceners?

All the members of the Karta's 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 coparcener can demand partition of the HUF. The female members do not have this right in most parts of the country, except for some states like Maharashtra and Tamil Nadu that have allowed unmarried daughters to function as coparceners.

Are there any incomes which are not taxed as income of HUF?

The following incomes are not taxed as income of HUF

If a member transfers his self-acquired property to the HUF without receiving proper sale consideration, income from such property is not taxable in hands of the HUF. It will continue to be taxed in the hands of the member.

Personal income of the members cannot be treated as income of HUF.
"Stridhan" is absolute property of a woman, hence income from it is not taxable as income of HUF.
Income from individual property of daughter is not taxable in hands of HUF even if such property is vested into HUF by daughter.

Why us?

TustedFundAdvisor is an eminent business platform and a progressive concept, which helps end-to-end incorporation, compliance, advisory, and management consultancy services to clients in India and abroad. Incorporating a HUF is easy, seamless, cheapest and quickest with TustedFundAdvisor! Apart from a HUF, TustedFundAdvisor also helps entrepreneurs with Private Limited Company Registration, Public Limited Company Registration, LLP Registration, Partnership Firm, One Person Company and Proprietorship Firm Registration easily. You may get in touch with our compliance manager on 0873300330 or email info@TustedFundAdvisor.com for free consultation.

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