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This article provides detailed information on the account opening procedure of HUF (Hindu Undivided Family) account. Read on to know more about the features and tax benefits of HUF account.

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What is HUF Account?

Hindu Undivided Family (HUF):-
HUF is a family with husband, wife and children (and children’s spouses if any) living together. The property owned by this family will be through lineal ascendants or any ancestors. There are a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF. IT department of India has a format of taxation for a HUF; tax benefits can be availed from this format.
 
HUF accounts:-
Karta of a HUF is the senior most male member of the family and in financial terms he can also be called manager of the family. In this account a corpus is created where every family member can pool their income. The corpus will be handled by or authorized to handle by Karta (head of the family). Signature of karta will be required for every transaction from the bank. These accounts are similar to individual saving bank accounts; there will be various tax benefits that are available for an individual’s account while the income of members is being pooled in HUF account.
 
Features of HUF account:-
There are a few features of HUF account that makes it different from regular saving bank accounts.
  • Every member of the family can deposit their income in the common corpus
  • Single person’s authority while participation from entire family
  • Tax benefits on deposits under various sections
  • Corpus can be divided only on agreement of every coparcener of the family 
Documents required for opening HUF account:-
There are few documents that will be required for opening an HUF account.
  • HUF will have a unique PAN card; this PAN card along with the PAN of Karta should be produced.
  • A declaration form will be provided where every member has to make a signature stating the name of Karta and declare
    1. They are the only members of HUF.
    2. Karta to have sole authority over HUF account
    3. Every transaction on behalf of HUF account, made by each member of the family is governed by karta.
  • Residential proof of Karta
  • Identification proof of Karta
Apart from the points mentioned above there can be other documents or conditions depending on the bank where HUF account is opened.
 
Tax benefits on a HUF account:-
  • Since the account is equivalent to an individual’s account there are various tax benefits and a few of them are mentioned below.
  • According to IT act, tax rebates and deductions can be availed under sections 80C, 88 and 80L for HUF account.
  • Gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.
  • Corpus can be used for investment in tax free money instruments. 
Disadvantages of HUF account:-
  • There can be a strong sense of insecurity among members that can keep the corpus of the account empty and as long as corpus is empty the account is non functional.
  • If any of the members of HUF is willing to for a partition then the process of partition in deposit in HUF account can turn to be tedious (problematic).

  • Tarun:
    When karta of a HUF account dies, who will qualify as karta of that HUF account?
    03-Aug-2013 10:56 PM
  • vivek mittal:
    I wish to open an HUF account wherein I shall be karta with other members shall be my wife & 2 sons, both minor.

    In case I die before my elder son become major then who can operate the HUF account, during my absence.
    23-Jul-2013 09:07 AM
  • rekha sharma:
    Mam, I want to know whether mother of Karta can gift money to her son for creation of his HUF.

    Father of Karta has expired. Kindly reply
    17-Jul-2013 02:52 PM
  • shrikant:
    Can I open huf account in maharashtra bank ?
    05-Jul-2013 01:55 AM
  • VS.Mantrala:
    My wife's brother passed away recently, he was Karta of HUF with wife and 2 minor kids.
    This HUF has more than 10 lakh worth demat shares now what should be done
    25-Jun-2013 09:03 PM
  • rashmi:
    is nomination to be obtained in huf a/c?
    06-Jun-2013 01:16 AM
  • lk sharma:
    Can the income of property owned by karta
    & his wife be included in huf a/c?
    29-May-2013 01:18 PM
  • ASHOK.K.GAUTAM:
    What is the mandate of declaration which has to be given while forming a HUF ?
    13-May-2013 02:38 PM
  • pallavi kadam:
    Can we appoint Mandate holder in HUF A/c ?
    08-May-2013 12:29 PM
  • Vivek:
    Dear Sir,
    I am a bachelor. Can I open HUF account.
    my father is retired. can I become a karta and create HUF a/c
    02-Apr-2013 08:06 PM
  • Ashwani Kumar:
    I can avail any extra rebate from Income Tax as Karta of the family, whenever I have availed all the benefit of the rebate as to an employ. Please tell me that Can I avail any extra benefit, working as Karta of the family or otherwise.
    16-Feb-2013 01:28 PM
  • PRADEEP L.CHAUDHARI:
    CHEQUES,DRAFTS OR RTGS IN FAVOUR OF PERSONAL NAME OF KARTA OR IN FAVOR OF OTHER MEMBER OF HUF FAMILY CAN DEPOSITED IN HUF ACCOUNT OR NOT... PLEASE REPLY .. URGENT PLEASE..........
    15-Feb-2013 02:08 PM
  • Mehul Bhatt:
    who is covered in HUF family ?
    07-Feb-2013 10:05 PM
  • KABIL:
    For the opening of above mentioned account (huf), Is there initial fund of 1 required?
    08-Dec-2012 02:05 PM
  • manish agrawal:
    can I deposit cheque of member of HUF account?
    04-Dec-2012 12:08 PM
  • sanjeevrana:
    i would like to know how we create a huf account in bank and maximum tax rebate under huf
    16-Sep-2012 08:07 PM
  • BALVEER SINGH:
    I WOULD LIKE TO KNOW HOW TO MAINTAIN BOOKS OF ACCOUNTS FOR HUF
    16-Aug-2012 03:21 PM
  • shresh:
    Very Informative!!!!!!!
    12-Aug-2012 11:38 AM
  • SACHIN1365:
    I have heard that the HUF accounts are closed by banks, such ordinance has been passed by the parliament. is it true?
    05-Aug-2012 11:31 PM
  • Mittal J. Thakkar:
    Thanks for the information Mam but i would like to get more information about it as in if we want to open an HUF account is it opened via bank only or is there any other way
    15-Jun-2012 05:59 PM
  • raju ghule:
    Respected Madam,

    This information is very helpful for opening of HUF account considering the fact that even bankers also don't know the procedure of the above account. You saved my time.

    Thank you
    12-May-2012 10:07 PM