What is HUF and how to make HUF deed?

Ashok Pitroda | Last updated: 24 November 2022

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Quick Summary

A Hindu Undivided Family (HUF) is a family unit comprising individuals lineally descended from a common ancestor, including their wives and unmarried daughters. It's recognised as a separate legal entity under the Income-tax Act, 1961, and can be formed automatically within Hindu, Jain, or Sikh families. While not strictly mandatory, creating a HUF deed is highly recommended as it serves as legal proof of the HUF's existence, detailing its members, the origin of its funds, and other crucial information.

A Hindu Undivided Family is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Hindu Undivided Family is treated as a person under section 2(31) of the Income-tax Act, 1961. HUF is a separate entity for the purpose of assessment under the Act. A HUF cannot be created under a contract, it is created automatically in a Hindu Family. Jain and Sikh families even though are not governed by Hindu Law, but they are treated as HUF under the Act.

For the formation of HUF, we need to make a HUF deed. HUF deed is a legal document that consists of co-parceners lineally descended from a common ancestor. The co-parceners of the Hindu undivided family also include all persons lineally descended from a common ancestor and include their wives and unmarried daughters. A coparcener is a person who is entitled to his/her share of the property.

HUF is also formed with or without a legal deed, but it is always advisable to pursue a business with a written document. HUF deed is a legal deed consisting of details of membership of the HUF, the source of funds, and such other details as may be prescribed on it. The Deed acts as proof of the existence of the entity that has been formed.

What is HUF How to Create a HUF Deed in India

Agreement of HUF

This agreement of HUF is executed amongst the following persons.

No	Status of person	Name	Address	Age
1	Karta			Adult
2	Co-parcener [also write relationship with the karta, like the wife of the karta, son of the karta, daughter of karts, etc.]			Adult

Persons agree as follows

Section	Particulars
Name of HUF
Address of HUF
Date of commencement of HUF

The above persons are jointly referred to as co-parceners. The karta do with this declare that he/she is the karta of the HUF and persons as mentioned above are co-parceners of the HUF. Further, the karta received on behalf of the HUF the following gift from their Father which formed the corpus of the HUF.

Nature of Gift

This agreement is made on the following stamp paper.

Amount of stamp paper
The identity number of stamp paper

Persons have read and understood this agreement and solemnly affirm that the information above is true and correct and agreed to acknowledge the same without any pressure from any side and provide the signatures.

Date
Place

Karta	Signature of Karta	Photo of Karta
Co-parcener	Signature of Co-parcener	Photo of Co-parcener

FAQ :

A Hindu Undivided Family (HUF) is a family consisting of all persons lineally descended from a common ancestor, along with their wives and unmarried daughters. It is treated as a distinct legal person for assessment purposes under the Income-tax Act, 1961.

A HUF is formed automatically within a Hindu family and cannot be created through a contract. Jain and Sikh families are also treated as HUFs under the Act, even if not governed by Hindu Law.

A HUF deed is a legal document that outlines the details of the membership of the HUF, the source of its funds, and other prescribed information. It acts as proof of the entity's existence.

While a HUF can be formed with or without a legal deed, it is always advisable to have a written document, such as a HUF deed, especially when pursuing business activities. This deed provides legal evidence of the HUF's formation and structure.

A HUF deed usually includes the name and address of the HUF, the date of its commencement, the names and details of the Karta (manager) and co-parceners, and the nature of the initial gift that formed the corpus of the HUF.