HUF:
- Separate legal entity
- Recognized under Hindu Law
- Created by status (not contract)
- Consists of common ancestor + descendants
- Has own PAN, bank accounts, assets

Applicable To:
- Hindus
- Buddhists
- Jains
- Sikhs

Cannot Form:
- Muslims
- Christians
- Parsis
- Jews

Karta:
- Head of HUF
- Usually senior-most male
- Or senior-most female (now allowed)
- Manages HUF affairs

Coparceners:
- Have birthright to property
- Can demand partition
- Now includes daughters (after 2005)

Members:
- Broader than coparceners
- Include spouses of coparceners
- Have right to maintenance
- No automatic share in property

Automatic Creation:
Upon marriage of a Hindu:
- New HUF created
- Even without property
- Husband + wife = HUF
- Children join by birth

When Existing HUF Partitions:
- Each coparcener can create own HUF
- With their family
- Inherits share from original HUF

HUF Can Be Funded By:
- Gift from member to HUF
- Gift from non-member
- Inheritance
- But member's gift may attract clubbing

Key Benefit:
HUF has own PAN and files own return
- Separate from Karta
- Separate from members
- Own tax slabs apply

HUF Tax Slabs (Same as Individual):

Income up to ₹2.5 lakhs: Nil
₹2.5 - ₹5 lakhs: 5%
₹5 - ₹10 lakhs: 20%
Above ₹10 lakhs: 30%

New Regime Available:
₹3 lakhs basic exemption
Reduced rates

HUF Can Claim:
□ Section 80C: ₹1.5 lakhs
□ Section 80D: Health insurance
□ Section 80G: Donations
□ Section 24: Housing loan interest
□ Other Chapter VI-A deductions

Effectively:
- Additional deduction limits
- Beyond individual limits

Without HUF:
Individual income: ₹20 lakhs
Tax: ~₹3.5 lakhs

With HUF:
Individual income: ₹15 lakhs
HUF income: ₹5 lakhs
Individual tax: ~₹2.5 lakhs
HUF tax: ~₹12,500
Total tax: ~₹2.62 lakhs

Savings: ~₹88,000

Deed Contents:
- Name of HUF
- Karta name
- Member names
- Date of constitution
- Initial contribution
- Powers of Karta

PAN Application:
- Form 49A
- Select "HUF" as applicant
- Karta details
- Member details
- Address proof
- Karta's photo

Bank Account Requirements:
- HUF PAN card
- HUF deed
- Karta's KYC
- Address proof
- Member list

Sources of Funds:

Gift from Non-Member:
- Father-in-law gifts to son's HUF
- Friend gifts to HUF
- No clubbing issue

Gift from Member:
- Father gifts to own HUF
- Clubbing provisions may apply
- Income taxed in donor's hands

Ancestral Property:
- Inherited property
- Joint family property
- No clubbing

Inheritance:
- Through will to HUF
- Valid bequest

Section 64 Clubbing:

If Karta Gifts to HUF:
- Income from that property
- Clubbed with Karta's income
- Defeats tax purpose

If Member Gifts to HUF:
- Income clubbed with that member
- Same problem

Valid HUF Income Sources:

1. Gift from Non-Members:
   - Father-in-law to son's HUF
   - Friend to HUF
   - No clubbing

2. Gift from Father's HUF:
   - To son's HUF
   - Not clubbed with son

3. Ancestral Property:
   - Already belongs to HUF
   - No clubbing issue

4. Accretion on Non-Clubbed Assets:
   - Rent from property received as gift
   - Interest on gifted funds
   - After first generation: no clubbing

Long-Term Benefit:
- Father gifts ₹10 lakhs to son's HUF (clubbing applies)
- HUF invests and grows
- Father passes away
- Clubbing ends
- Future income: HUF's only
- Grandchildren benefit: No clubbing ever

Build now, benefit later!

HUF Can Own:
- Bank accounts
- Fixed deposits
- Mutual funds
- Shares
- Real estate
- Business interests
- Jewelry
- Vehicles

Karta Can:
- Manage day-to-day affairs
- Open bank accounts
- Make investments
- Sell movable property
- Take loans for HUF
- Sign contracts for HUF

Karta Cannot (without consent):
- Sell immovable property (generally)
- Partition HUF
- Make unauthorized gifts

When Karta Can Sell Immovable:
1. Legal necessity
2. Benefit of estate
3. With all coparceners' consent

Legal Necessity:
- Debts of HUF
- Maintenance obligations
- Marriage expenses
- Medical emergencies

Partition:
- Division of HUF property
- Among coparceners
- Ends HUF or creates smaller HUFs
- Each coparcener gets share

Can Demand Partition:
- Any coparcener
- Including daughters (after 2005)
- Even if minor (through guardian)

Cannot Be Denied:
- Partition is a right
- Not dependent on consent

Total Partition:
- All properties divided
- HUF ceases to exist
- Separate entities created

Partial Partition:
- Some properties divided
- HUF continues with rest
- Less common

Tax Treatment:
- Partition is not transfer
- No capital gains tax
- Cost of acquisition: Original
- Each coparcener gets proportionate cost

Document Should Include:
- Names of all coparceners
- List of all properties
- Division terms
- Valuation
- Share of each
- Signatures of all

Estate Planning Advantages:

1. Asset Protection:
   - HUF property has different rules
   - Survivorship applies
   - Not individually owned

2. Smooth Succession:
   - No probate for HUF property
   - Continues with surviving members
   - Less family conflict

3. Business Continuity:
   - HUF can run business
   - Survives death of Karta
   - New Karta takes over

4. Wealth Consolidation:
   - Family wealth in one entity
   - Unified management
   - Transparent structure

When Coparcener Dies:

Before 2005:
- Share devolved by survivorship
- Went to other coparceners
- Not by succession

After 2005:
- If coparcener has female heir
- Or child of predeceased daughter
- Share goes by succession
- Not survivorship

Strategy:
- Bequeath property to existing HUF
- HUF provides for multiple generations
- Tax efficient
- Unified management

Will Clause:
"I bequeath [property] to the HUF of my 
son [Name], to be held as HUF property 
for benefit of the family."

Problem:
Coparceners disagree on management

Solution:
- Clear HUF deed with rules
- Karta has management powers
- Dispute resolution mechanism
- Partition as last resort

Problem:
Member gifts to HUF, income clubbed

Solution:
- Receive gifts from non-members
- Long-term planning (clubbing ends on death)
- Use ancestral property
- Invest in growth assets

Problem:
Need to sell but coparceners won't agree

Solution:
- Show legal necessity
- Show benefit to estate
- Get written consent
- Court permission if needed

Clarification:
Courts have held:
- Senior-most female can be Karta
- After death of all male members
- Or with family consent

Every Year:
□ File ITR-2 or ITR-3 (if business)
□ By July 31 (unless audit)
□ Disclose all income
□ Claim deductions
□ Pay advance tax if applicable

Maintain:
□ HUF deed
□ Member register
□ Minutes of important decisions
□ Property documents
□ Income proof
□ Investment records
□ Bank statements

Plan:
- Create HUF at marriage
- Even with small initial gift
- Build over decades
- Grandfather→Father→Son HUF gifts

Result:
- Multiple HUFs in family
- Multiple tax exemptions
- Significant savings

Plan:
- Buy property in HUF name
- Rental income to HUF
- HUF claims deductions
- Lower tax on rental

Caution:
- Fund source must be proper
- Avoid clubbing

Plan:
- Run business as HUF
- Business income in HUF
- Salary to Karta (taxed separately)
- Profit retention in HUF

Benefits:
- Lower taxes
- Continuity on death
- Family involvement

Get Expert Help For:
- Initial HUF setup
- Large transactions
- Complex situations
- Business in HUF
- Partition decisions
- Estate planning integration

Team:
- Chartered Accountant: Tax planning
- Lawyer: Deed, partition, legal issues
- Financial Planner: Integration with goals