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HUF Formation

Set up your own HUF entity to avail various tax benefits Starting At ₹ 2499/- (Onwards) + GST

It just Takes 7 to 10 business days (subject to Government processing time). No Hidden Cost

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How to create HUF?

HUF has to be created keeping in mind the legal and financial requirements.

  1. Capital and Asset Infusion– HUF corpus can be created by-
    • Money received as gifts from relatives,
    • Assets received under a will or inheritance,
    • Partition of a larger Hindu Undivided Family or Reunion of separated co-parceners
    • Bringing together property of two or more persons.
  2. Legal requirement – A HUF is created through executing a deed. It can then apply to get a PAN for the HUF and open a bank A/c in the name of HUF. Although a HUF is automatically formed at the time of marriage, it is always advisable to have a written agreement as the Banks and Income Tax Dept ask for the HUF Deed.

Documents Required

  • PAN Card of all members
  • ID Proof (Driving License/Passport/Voter ID) of all members
  • Electricity Bill or any other utility bill for the address proof of HUF
  • Details of property and assets

Process of Forming a HUF

Formation of HUF can be done in 3 steps which have been summarized below:

Step 1: Preparation of Deed:

It is a formal document with Stamp paper of respective stamp of considerable value as per the state of registration. Deed shall state the names of the Karta and the Co-parceners (Members) of the HUF along with a declaration filed by all the members and co parceners.

Step 2: Apply for PAN Card:

On registration of Deed, a HUF can apply for PAN of its own. Once the PAN Card has been allotted, the HUF can claim benefit of income tax slab rates and deductions and exemptions which are available to an Individual.

Step 3: Open bank account:

With the help of above documents a HUF can open a Bank Account through which it will make all the transaction. A HUF Account can be opened in any bank account. The UF would also be required to have a Rubber Stamp of the HUF and all documents pertaining of the HUF should be properly stamped.

What other Registrations can be taken for an HUF?

Although HUF doesn’t require any specific registrations to operate a business, it is advised to obtain the following registrations to make the business function smoothly.

Registering under MSME Act (Udyam)

An HUF can get registered under the MSME Act by applying for Udyam Registration number. Udyam registration provides various benefits which are provided by Government authorities for promoting specific industries.

GST Registration

GST Registration is required if annual turnover is more than Rs. 20/40 lakhs. Also, if the HUF is doing online business then it is required to get a GST number.

Benefits of registering a HUF:

The major benefit in opening a HUF is that it can provide you with additional tax benefits that may help reduce your tax burden. Some of the benefits available have been summarized below:

Income tax benefits

An HUF is a separate entity from a legal point of view and the HUF has its separate PAN card. An HUF can run its own business to generate income. It can also invest in shares and Mutual Funds. And being a separate entity, the HUF enjoys a basic tax exemption of Rs 2.5 lakh. So, imagine that you create an HUF consisting of you, your spouse and two children. In addition to income tax benefits you enjoy individually, you can also avail of an additional basic income tax exemption of Rs 2.5 lakh each year.

Owning a house

Under current income tax laws, if you own more than one self-occupied property, only one of them can be claimed as a self-occupied property. The rest are ‘deemed to be let out’ and you have to pay tax on notional rent. However, an HUF can own a residential house without having to pay tax. In addition, it can also avail of a Home Loan to purchase a residential property and get tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act for loan repayment and up to Rs 2 lakh for interest thereon.

Life Insurance

Provisions of the Income Tax Act allow individuals to claim tax benefits on certain payments they make during a year. Similar benefits are applicable for an HUF. For example, an HUF can pay Life Insurance premium for individual members, and claim tax benefits under Section 80C. The maximum amount that can be claimed as a deduction under this section is Rs 1.5 lakh.


An HUF is allowed to make investments in tax-saving Fixed Deposits and Equity Linked Savings Scheme (ELSS) to earn tax benefits of up to Rs 1.5 lakh under Section 80C. And while an HUF cannot open a Public Provident Fund (PPF) in its name, it can claim tax deductions for the amount deposited by the HUF in respective PPF accounts of its members.

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