HUF Nature

A Hindu, Buddhist, Jain, or Sikh family can come together to form a Hindu Undivided Family (HUF). HUF has its own PAN and is taxed/ tax return filed separately from its members. Accordingly, the organization can claim deductions (such as those provided under Section 80) or exemptions allowed by tax laws on an individual basis.

Other silent fetures of HUF are:

• HUF has the option to purchase an insurance policy that covers the lives of its members.
• If members of the HUF contribute to its functioning, the HUF has the option to pay them a salary, which can be deducted as an expense from its income.
• Investments can be made from HUF’s income. The profits earned from these investments are subject to taxation for the HUF.
• A HUF is taxed at the same rates as an individual.
• Any assets in the name of HUF and any income earned thereon, is in the name of the entire family and not on an individual's name. Therefore, when a property is transferred to a Hindu Undivided Family (HUF), the entire family becomes the owner of that asset.

Formation Conditions

• Only a family can form an HUF.
• HUF, or Hindu Undivided Family, comprises of a forefather and all of their direct descendants, which includes their spouses and unmarried daughters. This group is considered a single entity for legal and taxation purposes in India.
• Usually the assets held by an HUF (Hindu Undivided Family) are acquired through various means such as gifts, wills, ancestral property, the sale of joint family property, or contributions made by its members to a common pool.
• HUF must be formally registered with a legal deed having details of HUF members and the business of the HUF.
• To establish an HUF, it is necessary to open a bank account and obtain a PAN card in the name of the HUF.
• The bank account for a Hindu Undivided Family (HUF) must be in the name of either the HUF itself or the karta (head) of the HUF.
• The sole authority to sign cheques and conduct financial transactions on behalf of an HUF rests with the karta. Nevertheless, the karta has the power to delegate this authority to any other member of the HUF.

Registrations

HUF Deed, PAN, TAN, GST, DSC, MSME, FSSAI, ISO.

Documents Required

PAN & Aadhar of all the members, Address proof, Photographs, etc.