HUF Registration Process in India : Accurate Guide #1

Hindu Undivided Family (HUF)

A HUF account in India is opened for managing the financial transactions of a Hindu Undivided Family (HUF). In simple terms, it’s a bank account for the HUF. Before understanding what a HUF account and HUF registration process in India are, it is more important to understand what a HUF actually is. Under the Income Tax Act, 1961, the creation of a HUF (Hindu Undivided Family) deed, obtaining a separate HUF PAN card, and opening a separate bank account by a married individual from any Hindu, Sikh, Jain, or Buddhist family are all considered aspects of forming a HUF. HUF is considered a separate entity and is treated as a distinct individual. HUF has also been referred to as a Hindu joint family. In India, anyone can save on income tax by forming a Hindu Undivided Family (HUF). An HUF is taxed separately from its members in India. An HUF has its own separate PAN (Permanent Account Number) and files its own income tax return. An HUF receives the same income tax exemptions as an individual.

HUF registration process in India: Consists of

HUF registration process in India includes the following:

Karta: The Karta is typically the head of the family who has the authority to perform all tasks for the family members and makes all decisions on their behalf.

Essential Elements of the Karta:

Main Part: The Karta serves as the primary decision-maker and administrator for the Hindu Undivided Family’s shared movable and immovable property, much like an administrator.
Assignation: Usually the oldest male member, although a senior female member may also serve as the Karta, particularly following her husband’s death.
Duties:
a) Oversees all HUF properties (real estate, investments).
b) Manages family budgeting, investments, and tax strategies.
c) Acts on behalf of the HUF in commercial dealings and legal affairs.
d) Guarantees the family’s adherence to legal and tax obligations.
Inheritance: When the Karta passes away, the next senior coparcener (typically the eldest son) assumes the role.
Coparcener and member: A coparcener is an individual who has the right to inherit ancestral property by birth and to demand a partition of that property. This includes the Karta’s (head of the family’s) sons, daughters, and grandchildren. While wives and daughters-in-law are not included as coparceners. They are only considered members of the HUF (Hindu Undivided Family) and do not have a say in the partition of the property.
Coparcenary applies to four generations down in the family structure in these ways:
a) 1st generation: First-time possessor of ancestral rights (Karta)
b) 2nd generation: Son and daughter of Karta
c) 3rd generation: Grandchildren of Karta
d) 4th generation: Great-grandchildren of Karta

Documents required for HUF registration process in India

The following documents are required for the HUF registration process in India:

HUF deed/affidavit
Aadhaar card of Karta
PAN card of Karta
PAN card of Karta’s spouse
Names of children (if any)
Email ID and mobile number
Date of marriage of Karta

HUF registration process in India: Step-by-step guide

The process of registering a HUF (Hindu Undivided Family) in India involves three main steps.

Creation of HUF deed/affidavit: The HUF deed is considered a primary basis for registration and serves as key evidence to certify the creation of the HUF and identify its members. The HUF deed is a legal and crucial document in India that declares the formation of a Hindu Undivided Family (HUF). The HUF deed is prepared in Word format based on all correct and accurate information about the Karta and family members. The HUF deed primarily includes the name of the HUF, details of the Karta (head of the family), details of the members/co-owners, declaration of intent, powers of the Karta, source of initial capital, rules of management, date of incorporation, succession plan, etc. After the entire document has been drafted, the deed is signed by the Karta (essential) and all coparceners (if they wish) on ₹100 stamp paper, and to enhance its legal validity, it is notarized by a registrar or notary public. This completes the first step of the HUF registration process in India.
Application for Allotment of PAN for HUF: Under the Income Tax Act, 1961, a Hindu Undivided Family (HUF) is recognized as a separate “person,” having its own Permanent Account Number (PAN) and the ability to file income tax returns (ITR) independently. Form 49A is used to apply for a HUF PAN card. This application form can be filed online or offline through the official website of NSDL e-Governance or the UTIITSL Form 49A primarily includes details such as the Assessing Officer (AO code), the name of the HUF (Hindu Undivided Family), the date of formation of the HUF, address, email ID, mobile number, sources of income, proof of identity/address/date of birth, and the name and location of the Karta (head of the family). After filling in all the necessary information, the Karta signs the application, and the application, along with proof of identity/address/date of birth and a copy of the HUF deed, is couriered to the Income Tax PAN Unit, Pune. It is worth noting that no photos of the applicant or any family members are attached to the HUF PAN Application. After submitting the application, a 15-digit acknowledgment number or token is generated. The acknowledgment number is used on the NSDL or UTIITSL portal to track the current status of your PAN card application. Once the application is approved, the e-PAN is sent to the registered email ID. The password for the e-PAN PDF file is the date of incorporation (in DDMMYYYY format), and the physical PAN card is sent to your communication address by post. This completes the second step of the HUF registration process in India.
Opening a bank account for a HUF in India: After obtaining the HUF deed and HUF PAN card, a bank account and demat account can be opened for the HUF in any private or government bank. All banks have their own specific forms and checklists for opening a new account for HUF. However, there are some common documents that are required by all banks, such as:
a) Copy of HUF Deed/Affidavit
b) Copy of HUF PAN card
c) Copy of Karta’s Aadhaar card and PAN card
d) Copy of address proof
e) HUF rubber stamp
f) Karta’s passport-size photograph
g) Account opening cheque from Karta’s savings account

All documents submitted to the bank when opening an account are self-attested by the Karta of HUF. The Karta of a HUF and other members can authorize the Karta, along with any other coparcener, to operate the bank account. After opening an HUF account, you can avail yourself of services such as net banking, mobile banking, debit card, and cheque book for HUF. This completes the third and last step of the HUF registration process in India.

Sources of income under the HUF registration process in India

A Hindu Undivided Family (HUF) can have multiple sources of income;

Business Profit: A Hindu Undivided Family (HUF) can conduct any business or profession in its own name, and the profits earned from it will be taxable in the hands of the HUF, not its members. The HUF is also eligible to obtain a GST registration certificate.
Rental Income: Rent received from ancestral property held in the name of the HUF or from property purchased in the name of the HUF using HUF funds is considered income of the HUF account.
Capital gains: Any profit arising from the sale of movable or immovable property (such as property, jewelry, shares, mutual funds) that is held in the name of the HUF and is part of the HUF corpus is taxable as capital gains of the HUF.
Income from other sources: Interest received from bank fixed deposits and dividends from investments in shares and mutual funds, when made using the HUF’s capital, are also considered part of income from other sources.

Corpus creation under the HUF registration process in India

After HUF registration process in India, the question arises: how to create a corpus in the HUF?

Gifts to HUF account: A Hindu Undivided Family (HUF) can receive completely tax-free gifts from its relatives (members of the HUF) under Section 56(2)(x) of the Income Tax Act, while gifts from non-relatives are tax-free up to ₹50,000 in a financial year. However, it’s important to understand that while these gifts are tax-free for the HUF account, if the HUF generates any income from this gift, will that income be clubbed in the account of the donor? Under the clubbing of income under Section 64(2), if members of the HUF transfer funds/property to the HUF account through gifts, the income earned by the HUF from those funds may be clubbed with the income of the gifting member.
Loan to HUF account: A HUF can take interest-free loans from its members. However, it is essential that the paperwork is done correctly and legally. This can help avoid the provisions related to clubbing of income. In other words, this can be considered a good option for creating a corpus in HUF account.

GST registration certificate under the HUF registration process in India

If a Hindu Undivided Family (HUF) source of income is a business, then it is eligible to obtain a GST registration certificate. However, it is not mandatory, although there are some conditions under which it might be mandatory. If a Hindu Undivided Family (HUF) is a service provider and conducts business exceeding ₹20 lakh in any financial year, then it becomes mandatory for that HUF to obtain a GST registration certificate. Similarly, if a Hindu Undivided Family (HUF) is a trader or manufacturer and is engaged in activities related to buying and selling goods, and conducts business exceeding ₹40 lakh in any financial year, then it becomes mandatory for that HUF to obtain a GST registration certificate. However, if a Hindu Undivided Family (HUF) wants to conduct business on an e-commerce website (such as Amazon India, Flipkart, Nykaa, Meesho, etc.), there’s a very high chance that obtaining a GST registration certificate will be mandatory to do business on these platforms. Nowadays, doing business on e-commerce websites is a trending option, and it proves to be a good choice due to its low cost, global reach, and easy marketing. So, these are some points about obtaining a GST registration certificate under the HUF registration process in India.

Simple ways to obtain a GST registration certificate under the HUF registration process in India

To obtain a GST registration certificate for a Hindu Undivided Family (HUF), you need to follow the online process on the official GST portal and apply for registration. After filling in all the necessary information and attaching the relevant documents in the online application, the application is submitted. After this, following Aadhaar OTP or biometric verification, the department issues an Application Reference Number (ARN), which is sent to the registered email and mobile number. The ARN is used to check the current status of the submitted application. Finally, based on all the submitted documents and information, the department issues the GST registration certificate.

Instant GST registration certificate in 3 days: The new Rule 14A of the CGST Rules, which will come into effect from November 1, 2025, provides a simplified process for low-risk businesses/applicants whose estimated total output tax liability on supplies to registered persons is less than ₹2.5 lakh per month. Such taxpayers will be issued the certificate within 3 days.

Documents/information required for GST registration certificate under the HUF registration process in India

To obtain a GST registration certificate for a Hindu Undivided Family (HUF), the following documents must be required;

PAN card of the Hindu Undivided Family (HUF)
PAN card and Aadhaar card of the Karta
Passport size photo of the Karta
Email ID and Mobile No.
Harmonized System of Nomenclature (HSN) code of business
Address proof of the principal place of business and consent letter
Declaration/authorization letter
Cancelled cheque/statement of HUF account

Benefits of the HUF registration process in India

The most significant advantage or reason for the existence of a Hindu Undivided Family (HUF) registration process in India is that it is a separate legal entity distinct from its family members, possessing its own PAN card. Like an individual, a Hindu Undivided Family (HUF) also enjoys the full benefit of exemptions and deductions based on the prevailing income tax slabs on its income, which is considered a major reason for tax savings. It is also considered a good tool for families to manage their assets more effectively. Furthermore, a business that operates through a HUF account is considered to belong not to a single person, but to all the members of that HUF. Similarly, a coparcener of a HUF has every right to claim their shares in the HUFs property.

Fees for HUF registration process in India

There is no fixed fee for the HUF registration process in India. The cost depends on the professional handling the HUF registration process and the services they provide. E-Tax World charges ₹2000 for the HUF registration services in India. This includes the legal HUF deed/affidavit and the HUF PAN card. In addition, it also includes the stamp paper, notarization and courier service used as part of this seamless process. E-Tax World provides comprehensive support for HUF registration on the income tax portal and guidance for opening a bank account and filing income tax returns (ITR) for HUF. E-Tax World guarantees the completion of the HUF registration process in India within 6 working days, and the best part is that you don’t need to go anywhere during the entire process. E-Tax World provides the fastest, straightforward, and hassle-free HUF registration online services across all states of India.

Author:
Honey Jain
(Tax & Legal Consultant)

This article provide you with accurate and reliable guide about Hindu Undivided Families (HUF), the HUF registration process in India, the documents required for HUF registration, a step-by-step guide to forming an HUF, HUF account opening, sources of HUF income, gifts to an HUF, loans to an HUF, the GST registration process for an HUF, the documents required for GST registration for an HUF, the advantages of an HUF account, and HUF registration fees.

If you have any further questions about HUFs or income tax-related matters, please contact us at 9958869427.

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