HUF Registration In India- Overview

The term HUF stands for ‘Hindu Undivided Family’ and consists of all persons directly descended from a common ancestor, and also the wives and daughters of the male descendants. A HUF comprises a Karta, coparceners, and members. Karta possesses the highest authority and manages the entire business and makes the final decision. Generally, the eldest member of the family takes the position of Karta. Hindu Undivided Family is governed and regulated by Hindu Law. HUF Registration is not possible by an agreement between two parties, nor can it be formed by a group of people who do not constitute a family.

The HUF has perpetual existence meaning that it continues to exist even after the death of the common ancestor acting as the Karta, and the next eldest male or female member becomes the head of the family and becomes the “Karta”. By forming a HUF, you can avail tax benefits by creating a family unit and pooling in assets, since HUF is taxed separately. The income of a HUF is assessed in the hands of the HUF and not in the hands of any of its members of the HUF family. Thus HUF is considered to be a separate entity. It has a separate PAN and a separate income tax return is filed for the same.