Meaning of HUF

HUF stands for Hindu Undivided Family or Hindu Joint Family. HUF is recognized throughout India, except for the state of Kerala. The Kerala Joint Hindu Family System (Abolition) Act, 1975 (officially Act No. 30 of 1976) abolished the traditional Hindu joint family property system in Kerala, converting joint family property into individual property for all members, treating them as tenants in common, and eliminating the obligation of sons to repay their father’s debts. A Hindu Undivided Family (‘HUF’) is considered an ‘individual’. The identity of a Hindu Undivided Family (HUF) is established through its PAN (Permanent Account Number). This PAN is used to open the HUF account in India and file its income tax returns. By obtaining accurate information about the HUF registration online process, you can complete it correctly and easily and take advantage of the benefits offered by an HUF.

Mitakshara and Dayabhaga Schools of Hindu Law under HUF account in India

Hinduism possesses one of the most ancient legal systems globally. This system is intricate and is categorized into multiple schools of thought. The primary ones are Mitakshara and Dayabhaga. These two branches of Hindu law significantly regulate various matters related to property inheritance and succession among Hindus. While both stem from ancient writings and scriptures, they vary in their interpretations and applications of the law. This results in variations in their approach to inheritance, co-parcenary rights, and the handling of female heirs. There are multiple schools, with the two main ones being Mitakshara and Dayabhaga. They derive from the ancient Dharmashastras. These institutions vary in their understandings of family law and succession. The Mitakshara system is influential in numerous regions of India. Dayabhaga is closely observed in the eastern regions, particularly in Bengal and Assam. These systems stem from various texts and offer differing perspectives on issues related to property rights, particularly in terms of defining coparcenary and determining who has the right to inherit ancestral property. These perspectives will now be categorized into their key domains, distinctions, and significance for contemporary society.

Key Points of Mitakshara Law for HUF account in India

Fundamentals of Inheritance: It is based on birthright inheritance. Sons gain rights to property upon their birth.
Area of Expertise: It occurred in nearly all areas of India, excluding West Bengal and Assam.
Co-owned Family Assets:  The idea of joint family ownership exists, in which male relatives from as many as four generations (sons, grandsons, and great-grandsons) collectively share the property.
Entitlement to Divide: The son is entitled to request the division of the property while the father is still alive.
Women’s Rights to Property: Traditionally, women have been denied inheritance rights. Nonetheless, following the Hindu Succession (Amendment) Act of 2005, daughters possess equal rights.
Attributes: It is a traditional system.
Control over Assets: The father cannot sell or transfer Property without the approval of the other coparceners of the HUF.
Rights of Spouses after Loss: A widow cannot claim the property but is entitled to property upkeep
Core of Possession: Property is exchanged as joint family ownership until officially divided.

Key Points of Dayabhaga for HUF account in India

Fundamentals of Inheritance: It involves a bequest following the father’s passing. Sons possess no rights until the father’s passing.
Area of Expertise: It occurs solely in West Bengal and Assam.
Co-owned Family Assets: The idea of a joint family does not exist. Rather, it adheres to personal ownership principles. This indicates that the property is separately partitioned following the owner’s passing.
Entitlement to Divide: Partition can take place only after the father’s passing, and the son cannot request a division of property while the father is still alive.
Women’s Rights to Property: Daughters may inherit property, particularly when there are no sons. Women’s rights regarding inheritance have also strengthened.
Attributes: It’s an open system.
Control over Assets: The father possesses greater authority over the property and the rights to sell or transfer it.
Rights of Spouses after Loss: A widow is entitled to inherit the property and receive a portion of it following the death of her husband.
Core of Possession: Property is regarded as personal ownership and is distributed among heirs following the father’s passing.

HUF Registration Process in India

In India, only families belonging to the Hindu, Buddhist, Jain, and Sikh communities can create a Hindu Undivided Family (‘HUF’). In a Hindu Undivided Family (HUF), the eldest male member of the family is called the Karta, and all other members, such as the Karta’s wife, children, daughters-in-law, grandchildren, etc., are considered members of this HUF. A HUF is automatically formed after marriage. However, to avail of the income tax benefits, three main steps need to be completed for HUF registration process in India.

1. Making an affidavit for HUF is the first step: This document primarily declares the formation of a Hindu Undivided Family (HUF). It is also referred to as the HUF deed. The key features of the HUF deed format are the name of the HUF, details of the Karta and other family members, the date of formation of the HUF, and other relevant conditions that are included in it.
2. Applying for a PAN card for HUF is the second step: The HUF PAN card in India is a legal and tax entity recognized under the Hindu Succession Act, 1956. Obtaining a PAN card is considered the most crucial step for HUF creation in India. Form 49A is filed to obtaining a PAN card for a HUF (Hindu Undivided Family). This form is filled out online on the Protean (formerly NSDL eGov) or UTIITSL websites. The completed form is printed, and the required documents are attached. All documents are signed by the Karta and couriered to the address given below:       

Protean eGov Technologies (formerly NSDL):
INCOME TAX PAN SERVICES UNIT
(Managed by Protean eGov Technologies Limited)
4th Floor, Sapphire Chambers,
Baner, Pune, Maharashtra, 411045

3. Opening a bank account for HUF is the third step: After becoming a HUF through an affidavit or HUF deed and receiving the HUF PAN card, a bank account for the HUF can be opened at any nearby branch. A rubber stamp is also required when opening a HUF account in India. This is required by the bank and is affixed to the account opening documents signed by the Karta. This stamp mentions the name of the HUF and the Karta. This rubber stamp can be easily obtained from the market, or many online websites offer this service.

   Documents Required for Opening an HUF Account in India

   Here is the list of documents needed for bank to open an HUF account in India:

   1. PAN card of HUF
   2. HUF affidavit or HUF deed
   3. HUF rubber stamp
   4. PAN card of Karta
   5. Aadhaar card of Karta
   6. Passport-sized photo of Karta
   7. PAN, Aadhaar, and photo of the authorized signatory other than Karta (if any)
   8. Email ID & Mobile number
   9. Account opening cheque from Karta’s personal account

   Benefits of HUF Account in India

   Establishing an HUF account in India offers numerous advantages, especially regarding tax benefits and asset management.

   1. A Hindu Undivided Family (‘HUF’) is subject to tax at the same income tax slab rates (old or new regime) that apply to an individual person.
   2. An HUF account in India is treated as a separate entity, therefore, the standard income tax exemption applies to its entire taxable income. This is in addition to the income tax advantages that HUF members already receive separately.
   3. Moreover, the revenue from the sources listed below is not attract any tax liability for the HUF account in India.
   • Income derived from property given by a member to the HUF without proper compensation.
   • Earnings from a female’s individual assets.
   • Earnings from an impartible estate are subject to tax for the estate owner, not the Hindu Undivided Family (‘HUF’).
   4. HUF account in India is eligible for deductions under Sections 80C, 80D, and various other provisions of the Income Tax Act, similar to an individual taxpayer.
   5. Revenue from inherited properties or enterprises can be taxed under the HUF to lower the taxable income of individual family members.
   6. HUF account in India enables the collective administration of family assets. Hereditary resources like real estate, companies or financial investments can be overseen through a single organizational structure.

  HUF Demat Account in India

A Hindu Undivided Family, abbreviated as HUF, can establish a demat account for trading and investing in the markets. HUFs are regarded as a single unit for tax purposes, along with various financial advantages. This indicates that every family member can benefit from tax advantages with the HUF demat account while engaging in stock trading and investing. A Hindu family registered as an HUF, meaning a Hindu family that is linearly undivided, is eligible to open an HUF demat account. The HUF possesses its own documents such as a PAN card, and the family head, known as the Karta, is typically responsible for overseeing the HUF’s financial matters. The main function of a demat account for a Hindu Undivided Family (HUF) is to store securities and handle corporate actions, facilitating group investments and tax efficiency. In a Hindu Undivided Family (HUF) account in India, succession happens automatically. It acts as a central repository for all family investments, making inheritance planning easier.

Benefits of HUF Demat Account in India

Opening a demat account in India for HUF allows you and your family to access multiple advantages. The primary advantage is that the whole family registered as a HUF is regarded as one unit.

1. Additional advantages of HUF demat account in India include: A HUF is considered one entity for tax purposes.
2. Members of the HUF are exempt from paying capital gains tax.
3. HUF taxation resembles individual taxation regarding the tax brackets.

List of Required Documents for Opening of HUF Demat Account in India

Here is the list of documents needed to open a HUF Demat Account in India:

1. HUF Permanent Account Number (PAN) Card
2. Karta’s Personal PAN Card
3. Karta’s Aadhaar Card
4. Bank Statement of HUF account in India

Hopefully, this article will be helpful in providing you with accurate information about HUF account in India. If you are also looking for hassle-free HUF registration services in India, please contact us at +91-9958869427.