Hindu Undivided Family (HUF)Registration

• Hindu Undivided Family (?HUF?) is treated as a ?person? under section 2(31)? of the Income-tax Act, 1961. HUF is a separate entity for the purpose of assessment under the Act.


• Under Hindu Law, an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. An HUF cannot be created under a contract, it is created automatically in a Hindu Family.


• Jain and Sikh families even though are not governed by the Hindu Law, but they are treated as HUF under the Act


• It is managed by Karta.

An HUF is recognized as a separate assessable entity under the Act. Its income may be assessed if following two conditions are satisfied:

• There should be a coparcenership. In this connection, it is worthwhile to mention that once a joint family income is assessed as that of HUF, it continues to be assessed as such in subsequent assessment years till partition is claimed by coparceners.


• There should be a joint family property which consists of ancestral property, property acquired with the aid of ancestral property and property transferred by its members


• It is managed by Karta.

Ancestral property is the property which a man inherits from any of his three immediate male ancestors, i.e. his father, grandfather and great grandfather. Therefore, property inherited from any other relation is not treated as ancestral property. Income from ancestral property held by following families is taxable as income of HUF:

a) A family of widow mother and sons (may be minor or major) ;
b) Family of husband and wife, having no child ;
c) Family of two widows of deceased brothers ;
d) Family of two or more brothers ;
e) Family of uncle and nephew ;
f) Family of mother, son and son?s wife ;
g) Family of a male and his late brother?s wife

Property obtained by daughter from joint family property would be treated as her absolute property. Any income therefrom is chargeable to tax in her hands in the individual status only. This will also apply to any legal heir obtaining property in the capacity of a descendent.

• HUF has its own PAN and files a separate tax return. A separate joint hindu family business is created since it has an entity separate from its members.


• Deductions under section 80 and other exemptions can be claimed by the HUF in its income tax return.


• HUF can take an insurance policy on the life of its members.


• HUF can pay salary to its members if they are contributing to its functioning and work of the joint hindu family business. This salary expense can be deducted from the income of HUF.


• Investments can be made from HUF?s income. Any returns from these investments are taxable in the hands of the HUF.


• An HUF is taxed at the same rates as an individual.

An HUF is taxed separately from its members. Therefore, deductions (such as under section 80) or exemptions allowed under the tax laws can be claimed by it separately. For example, if you and your spouse along with your 2 children decide to create an HUF, all the 4 of you as well as the HUF can claim deduction for section 80C. HUF is usually used by families as a means to build assets. Read how to save taxes here

The head of the HUF is called the Karta, which is the senior-most male member of the family.

Yes! Until January 2016, a woman could not be the HUF Karta. But in a landmark Expert'se, the Delhi High Court ruled in favour of a female being the Karta of an HUF. However, the same has not been incorporated in the Income Tax Act as yet.

All the members of the Karta?s family can be members of the HUF. The male members are called coparceners, while the females are referred to as just members. The difference between the two is that any of the coparcener can demand partition of the HUF. The female members do not have this right in most parts of the country, except for some states like Maharashtra and Tamil Nadu that have allowed unmarried daughters to function as coparceners.

The following incomes are not taxed as income of HUF

• If a member transfers his self-acquired property to the HUF without receiving proper sale consideration, income from such property is not taxable in hands of the HUF. It will continue to be taxed in the hands of the member.


• Personal income of the members cannot be treated as income of HUF.
  "Stridhan" is absolute property of a woman, hence income from it is not taxable as income of HUF.
  Income from individual property of daughter is not taxable in hands of HUF even if such property is vested into HUF by daughter.