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Hindu Undivided Family (HuF)

The Hindu Undivided Family (HuF) is a unique concept in India. It is established in the Hindu traditions of holding certain ancestral property as a joint family. Certain salient features of an HuF are as follows:

  1. It arises from marriage of an individual. It is a natural occurance and does not require registration , as such, for its creation.
  2. Head of the family is called ‘Karta‘ . The other members are called co-parceners.  Karta is the guardian of the family and takes care of the interest of all members of the family. Usually karta is a male but as after the 2015 amendments , female co-parceners are given equal status as male co-parceners. Hence , its also a judicial view that now, even women can be karta, in the absence of any senior male member.
  3. Who can be co-parceners/ members: Husband/ Wife and their children and future generations. Thus parents of Mr. X cannot be member of X (HuF) but X is be a member of his father’s HuF.

Tax implication:

  1. HuF offers certain tax advantages. There is a separate minimum exemption limit for HuF (similar to that for resident individuals). Hence all investments in the name of HuF enjoy a separate limit of Rs. 2.5 Lakhs (present limit) and also enjoy exemption under other sections like 80TTA etc.
  2. Clubbing of income – Clubbing section restrictions under the Income Tax Act,1961 apply to fund transfers to HuF. This should be kept in mind while planning taxes.
  3. Tax deductions under Chapter VIA: Certain sections apply to HuF also. This can be used for further tax planning.
  4. PAN Card for HuF: HuF has its own permanent account number (PAN). PAN Card application should be accompanied by the documents of the Karta and a notarised affidavit with certain details of the HuF.

Our direct tax team has vast experience in ensuring optimum taxation on all matters pertaining to HuF including obtaining PAN, income tax return filing and consultancy. Entrecap Business Services is eager to serve you professionally in above matters.

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