Process for hindu undivided family (huf)

Step 1: Create HUF Deed

To create HUF, firstly HUF Deed shall be created. The HUF Deed is a written formal document on stamp paper expressing the names of the Karta and the Co-parceners [Members] of the HUF. The eldest male member of the family becomes Karta of the HUF or as decided by the co-parceners and the members.

A declaration is made by each family member where they declare the following:

  • Name of the Karta.
  • Karta has the solemn authority given to the accounts of the HUF.
  • Total members of the HUF.
  • The capital amount that was used while the HUF was established.
  • Karta holds the right to govern all the transactions of the HUF accounts on behalf of the members.

In the HUF Deed, the name of the HUF is also required to be stated at the time of the creation of the HUF Deed. The name of the HUF is the name of the Karta, with the suffix HUF. For example: if the name of the Karta is Mohit Dhamecha, then the name of his HUF would be Mohit Dhamecha HUF.

Step 2: Apply for HUF PAN Card

A HUF is treated as a separate legal entity from its members in the eye of the law thus it needs to apply for a separate PAN Card. A separate form is prescribed for HUF PAN Card i.e. Form 49A, which can be filed physically as well as online.

When the PAN Card is allotted, the HUF can file separate Income Tax returns under his name. Now the HUF can claim benefits and allow deductions under the income tax laws. The application shall be signed by the Karta of the PAN Card and Income Tax Return.

Step 3: Lastly Open a HUF Bank Account

A bank account shall be opened for HUF in which all the payments of HUF shall be maintained. The bank account can be opened in any bank for HUF purposes. At the time of the creation of HUF, while opening the bank account, the HUF would require a Rubber stamp of the HUF and all other documents relating to HUF shall be properly stamped accordingly.

When all the above three steps have been completed, the HUF now holds a separate legal entity and from the time the amount received in the name of HUF will not be taxed as individual members of the HUF, it would be separately taxed for the HUF.

List of Documents required for HUF Registration

The following is the list of documents required for Hindu Undivided Family Registration-

  • Pan Card of Karta.
  • ID Proof [Driving License/Aadhar Card/Passport/Voter ID] of Karta.
  • Electricity Bill or any other utility bill for the address proof of Karta.
  • Passport-size photographs of Karta.
  • Signatures of the Karta, the Co-parceners, and the members of a HUF.
  • HUF Deed.