Article

Hindu Undivided Family
June 07 , 2012

A Hindu Undivided Family (HUF) is nothing but a separate legal entity consisting of members of your family. A husband-wife, father-son, siblings and other such family members can form an HUF. The eldest member of the HUF is called the Karta, and he operates the HUF. You can have a written deed of creation, but that is not necessary. If you get the HUF a PAN, create a stamp and open a Bank Account, you are pretty much done in terms of creating the entity.

There are some special circumstances when an HUF proves useful:

  • If there is a family property that siblings are inheriting, taking it into HUF name is often beneficial
  • Similarly, if there is a family business, an HUF is a natural place to operate it through

In both the above cases, you can take property or business in individual names as well. But then, you would lose the tax benefits of having a separate legal entity (lower tax bracket, deductions, etc). Also, HUFs can avoid family disputes later in terms of how the inherited property or business gets split.

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