HUF(Hindu Undivided Family), Karta of a HUF is the senior most male member of the family and in financial terms he can also be called manager of the family. In this account a corpus is created where every family member can pool their income. The corpus will be handled by or authorized to handle by Karta (head of the family). Signature of karta will be required for every transaction from the bank. These accounts are similar to individual saving bank accounts; there will be various tax benefits that are available for an individual’s account while the income of members is being pooled in HUF account.
Features of HUF account:-
There are a few features of HUF account that makes it different from regular saving bank accounts.
- Every member of the family can deposit their income in the common corpus
- Single person’s authority while participation from entire family
- Tax benefits on deposits under various sections
- Corpus can be divided only on agreement of every coparcener of the family
Tax benefits on a HUF account:-
- Since the account is equivalent to an individual’s account there are various tax benefits and a few of them are mentioned below.
- According to IT act, tax rebates and deductions can be availed under sections 80C, 88 and 80L for HUF account
Documents required for opening HUF account:-
There are few documents that will be required for opening an HUF account.
- HUF will have a unique PAN card; this PAN card along with the PAN of Karta should be produced.
- A declaration form will be provided where every member has to make a signature stating the name of Karta and declare
- They are the only members of HUF.
- Karta to have sole authority over HUF account
- Every transaction on behalf of HUF account, made by each member of the family is governed by karta.
- Residential proof of Karta
- Identification proof of Karta