What is HUF? What are the advantages of opening a trading/demat account which is a HUF?


#41

HUF is a family with husband, wife and children (and children’s spouses if any) living together. The property owned by this family will be through lineal ascendants or any ancestors. There are a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF. IT department of India has a format of taxation for a HUF; tax benefits can be availed from this format.

Documents required:

  1. Latest color photograph of karta
  2. Copy of PAN card of HUF and karta
  3. Address proof of karta
  4. Bank proof (cancelled cheque)
  5. Copy of Financial details, if opted for trading in derivatives segment
  6. Copy of Demat Client Master / holding statements
  7. HUF stamp should be affixes wherever client signature ( for EQ segment)
  8. HUF declaration duly stamped

Advantages of opening a trading

1. Karta manages the HUF account on behalf of the Co-parceners.
2.Under the Income Tax Act, an HUF is a separate entity for the purpose of income tax return.HUF will also gain from the tax slab structure of computing income tax. 
3.According to IT act, tax rebates and deductions can be availed under sections 80C, 88 and 80L for HUF account. 


#42

HUF account is Hindu Undivided Family. The advantage of opening HUF Trading & Demat Account is he will get Tax benefit and can invest under Section 80C.

Documents Required are as follows:

  1. PAN Card copy of the HUF.
  2. Bank Statement of HUF.
  3. PAN Card copy & Address Proof of Karta.
  4. HUF Declaration & declaration given by Karta & co parceners of the HUF

#43

HUF = Hindu Undivided Family it is considered as separate entity in terms of Tax computation in Indian tax system. HUF definition says that apart from individuals there is another separate entity called “Family” which can also have its own assets and liabilities and even regular source of income, which should be taxed separately. main benefit for HUF is in terms of Tax computation in India Benefits: 1. Karta (Principal) manages the HUF account on behalf of the Co-parceners. 2. Under the Income Tax, an HUF is a separate entity for the purpose of income tax return.HUF will aslo gain from the tax slab structure of computing income tax.3. According to IT act, tax rebates and deductions can be availed under sections 80C, 88 and 80L for HUF account. 3. In case of HUF, shares can be transferred in the name of the Karta. 4. Every member of the family can deposit their income in the common account. 5. The Joint Money can be used for investment in tax free money instruments.


#44

HUF
Majority of the population in India belongs to the Hindu community. Hinduism, being an ancient religion has several old customs and traditions as well as rituals which are being followed by its members even in present times. The joint family system, where members of one family lived together under one common roof, including married brothers, their children and grandchildren, sometimes even extending to five generations, continues even today in most Hindu families. Under the joint family system, the members share houses, properties, business, income, wealth, food and their value systems and principles. Therefore, in India, a joint Hindu family is given a separate legal entity status called ‘Hindu Undivided Family’ (HUF) and this status is shared and enjoyed by all members of the family.


Benefits: Tax savings through HUF
HUF is a good tax saving tool as it is regarded as a separate legal entity under the tax law and also assessed to tax separately as a distinct legal person. This implies that a person can file two income tax returns, one in his personal individual capacity and one in the name of his HUF. This gives the benefits of dividing his taxable income between two entities and hence, he can claim double deductions and expenses in both capacities, thereby reducing his total taxable income and tax liability substantially. For e.g. at present, the tax free income in India is Rs. 200,000 per annum. An individual can thus claim a minimum of Rs. 400,000 as total exempt tax free income, (Rs. 200,000 in his personal and an equal amount in his HUF return).

HUF Documentation
• Duly filled HUF Trading & Demat form with photograph of Karta affixed and signed across.
• PAN Card copy of the HUF.
• Bank Passbook/Bank Statement of HUF indicating its existence
• PAN Card copy & Address Proof of Karta.[(T+D)]
• Declaration to be given by Karta & all major co-partners of the HUF – Annexure 1C (For Equity Account)
• HUF Declaration is required
• Applicant original self-attested with HUF Seal clear ‘PAN Card (HUF)’ copy required in A4 size paper
• Applicant original self-attested with HUF Seal  latest Bank Statement with 3 months transactions (with contains Account Holder Name, Account Number, Holder Address, Bank Logo or Original Bank Seal, Bank Official Signature) required for Address and MICR Proof.
• Applicant original self-attested without HUF Seal clear ‘PAN Card (Individual)' copy required in A4 size paper.
• Applicant original self-attested clear ‘Address Proof’ copy required in A4 size paper.


Important
Karta should sign the Account Opening Form and other documents under the stamp of HUF.
All KYC documents to be attested by the Karta.


#45

HUF Account is Hindu Un Divided Family .The major advatange of opening this type of Trading / Demat account is One of the save tax .

Documents Required ;

Pan card & address proof of HUF karta.

Declaration from all the members of HUF


#46

Hindu Undivided Family (HUF):-

HUF is a family with husband, wife and children (and children’s spouses if any) living together. The property owned by this family will be through lineal ascendants or any ancestors. There are a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF. IT department of India has a format of taxation for a HUF; tax benefits can be availed from this format.

HUF accounts:-

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.

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.
  • Gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.
  • Corpus can be used for investment in tax free money instruments. 

#47

HUF - Hindu Undivided Family

Benefit - Tax benefit

Would require HUF - PAN & ADDRESS PROOF , CHEQUE and declaration format which will have co-members details and notary to be done and non individual KYC


#48

Basically, the logic behind opening an account as Hindu Undivided Family is to save tax.

For example H has income and tax as below:

Salary 8,00,000 
Trading Income 5,00,000
Deduction 1,00,000
Total income 14,00,000
Tax on income 2,57,500

W has:

Salary 500000
Deduction 50,000
Total income 4,50,000
Tax on income 25,750

So the total tax of couple is Rs, 2,83,250.

If now H and W form a HUF and the trading income is diverted to HUF the tax saving is Rs. 1,54,500.

HUF Tax on trading income: 30,900
H's Tax on salary: 72,100
W's Tax on salary: 25,750
Total tax of couple after HUF: 1,28,750

This is because of the slab benefit after opening a HUF account. Apart from this even the 80C deduction over and above the limit used by any of the individual of the family can also be taken as HUF deduction.

Please refer the link for documents required to open a HUF account. This is in case of opening a HUF account at Zerodha, which would almost be same with any other broker.


#49

HUF stands for Hindu Undivided Family.The account is openned on the name of ‘karta’ who is a male member who is head of the family and other members of the family are termed as ‘Co-parceners’.
The Benefits are: All the members of the family can trade in a same id.
The main advantage is tax benefit, instead of paying tax individually they can pay the tax by combining all the members income.
HUF will have a unique PAN card, which will there on the name of karta.

Residential proof of karta and Identification proof of Karta are the documents required for opening the HUF account.


#50

A very effective and legal way advised by chartered accountants to save tax is HUF i.e HINDU UNDIVIDED FAMILY .In india there are many families which are individed and the incomes earned by such families are joint income as compared to indivisual income.

As these are joint incomes and not indivisual incomes, these incomes cannot be taxed in the hands of any specific indivisual and are therefore taxed in the hands of the whole family.As these are taxed in the hands of the family , the family has seperately PAN card as compared to indivusual members of the HUF who also have a seperate PAN card.

Basically the logic behind forming an HUF to save tax is to avail the benefit of an extra PAN CARD legally.As the income of the family is not taxed in the hands of any specific indivisual, a new pan card is alloted to the HUF and Tax would be paid by the family using this PAN card.It will also enjoy the benefits of income tax slabs i.e income would be tax free up to the specidies limits and would then be pregressively at 10% , 20% and 30% resulting in tax saving.


#51

Hindu Undivided Family Account Opening Required Documents

  • Latest color photograph of Karta signed across the photograph 
  •  Copy of PAN Card of HUF and Karta 
  •  Copy of Financial Details, Bank Passbook/Bank Statement of HUF indicating its existence.
  • Declaration to be given by Karta 

#52

Opening the HUF account there will be a tax benifit and HUF stands for Hindhu undivided family,

The following doucments are required,

  1. Kartha’s individual pan card and address proof with self attested and cancel cheque leaf (without HUF seal)

  2. HUF Pan copy address proof (bank statement) with HUF seal and signature and HUF cancel cheque leaf required

  3. Co Posner’s (Family member details required) details required

  4. Individual KYC required without the HUF seal and Non-Invidual KYC required with HUF seal and signature, providing the photograph on necessary places.


#53

HUF

HUF as name suggests means HINDU UNDIVIDED FAMILY. As soon as an hindu individual gets married he can open an HUFand his spouse and children can become the member of the HUF. It is not an agreement between two parties but it is a right attained by birth. ​Only one member has to be male ,that is enough.Male members are called coparceners while females are called members.and the most male member is called KARTA,(head)

Under income tax HUF is treated as seperate income ,So one can divide the income in two parts.On sale of proeprty one can transfer the money to this HUF account. Income from HUF can be invested in shares/ MFS/ and can be assessed under HUF. Gifts received in this account are treated as assets.

Documents For HUF account

1. HUF BANK ACCOUNT

2. HUF PAN CARD

3. HUF DEED

HUF account opening requirements

  1. Duly filled Account Opening Form with photograph of Karta affixed and signed  across. Account is opened in name of Karta.
  2. Proof Of Address and PAN card copy in the name of Karta.
  3. PAN Card and bank passbook/bank statement of HUF indicating its existence.
  4.  Bank statement should be of the recent quarter and contain the logo or seal of the bank. It should also be self-attested by the Karta.
  5. Declaration by the Karta giving details of the family members of the HUF with their names, date of birth, sex and relationship with the Karta.
  6. All the KYC docs are to be self-attested.
  7. The Karta should sign the AOF and other documents under the stamp of HUF
  8. HUF account cannot be opened with joint holders.
  9. No nomination can be made in HUF account
  10. Cancelled cheque with clients name preprinted on the same is required. In case of a/c opening if clients name is not visible on cancelled cheque then we either require bank statement/ bank passbook with same bank a/c number reflecting on the same 

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#54

HUF : Hindu undivided family, all the family members are part of it and head of the family is known as Karta
the main advantage of HUF is saving tax legally, new pan card will be allotted to the whole family, main disadvantage of HUF is all assets in the name of HUF are assets of family and not of a specific individual, all members have right in the assets of HUF


#55
  1. What are the benefits of opening a demat account for investors?
    A demat account has become a necessity for all categories of investors for the following:
    a. SEBI has made it compulsory for trades in all listed scrips to be settled in demat mode. Although,
    trades up to 500 shares can be settled in physical form, physical settlement is virtually not taking
    place for the apprehension of bad delivery on account of mismatch of signatures, forgery of
    signatures, fake certificates etc.
    b. It is a safe and convenient way to hold securities compared to holding securities in physical form.
    c. No stamp duty is levied on transfer of securities held in demat form.
    d. Instantaneous transfer of securities enhances liquidity.

HUF stands for Hindu Undivided Family. It is a demat account opened for managing securities of a
family. The account is managed by a ‘Karta’ who is a male member of the family and other members of
the family are termed as ‘Co-parceners’. Karta manages the HUF account on behalf of the Co-parceners.
e. It eliminates delays, thefts, interceptions and subsequent misuse of certificates.
f. Change of address, registration of Power of Attorney – can be effected across companies by one
single instruction to the DP.
g. Market lot of one share for the purpose of transactions - so no odd lot problem.
h. Any number of securities can be transferred / delivered with one delivery instruction. Therefore,
paperwork and signing of multiple transfer forms is done away with.
i. It facilitates taking loans / advances against securities.
j. Immediate credits in case of any allotment in Non cash corporate actions such as bonus, rights
issues and IPOs.

Basically it is for tax saving purpose…


#56

 HUF , Hindu undivided family,is a separate entity in itself and qualifies for all tax benefits under Section 80C (up to Rs 1 lakh), 80D (health insurance premium), 80G (donation), 80L (income from bank account), Section 54 (capital gains) and so on.

Documents required:

Bank account should be in the name of HUF
Photograph of Karta
Proof of identity (same as stated for Individuals)
Proof of address of the Karta (same as stated for Individuals)
Pan number in HUF's name
Proof of Bank Account: Any one of the following may be submitted
Copy of Bank Statement
Copy of first page of the Bank Pass Book.
A canceled cheque (only if the account holder's name is printed on it)
List of coparceners in the HUF, along with an authorization given to the Karta by the said coparceners to open and operate the DP and Trading accounts.
DP should be HUF DP A/c.


#57

The question of HUF status for a Hindu buyer or seller of any property assumes importance because of certain tax advantages attached with HUF under the income tax and wealth tax laws. Thus, if an individual has personal income and has also HUF income, he would be entitled to have an exemption of Rs 150,000 for his individual income and another Rs 150,000 for his HUF income.

Besides, he would also be eligible to a further income tax deduction or exemption of Rs 100,000 under Section 80C in respect of LIC premia, PPF contribution, NSC, etc., both on individual and HUF income separately.

Besides, under the Wealth Tax Act, 1957 too, separate exemptions are available for individual property and HUF property.

Thus, where the taxable individual wealth is eligible to a general exemption of Rs 150.000, the HUF’s taxable wealth is also eligible to a further general exemption of Rs 150,000. Hence, persons having immovable property and jewellery and motorcars under HUF status stand to gain from the extra exemption under Wealth Tax Act as well.


#58

HUF (Hindu Undivided Family) People open this account to save tax and the family members are a part of the account.

Check this link and read from Q 27 to Q 39 to know more.


#59

An HUF, or a Hindu Undivided Family, is a separate tax entity in addition to individual persons who are members of such a family. If you are Hindu, Buddhist, Jain or Sikh, you can have an HUF as a separate tax entity. You can claim all tax benefits under Wealth Tax and Income Tax. An HUF is eligible for those exemptions that are available to a resident Indian who is not a senior citizen. It can own property and also have its own business.

Advantage :

As HUF enjoys separate tax benefit under sec 80C, one can use the income of HUF for buying Life & health insurance for family ,trading and the permissible deductions can be availed for tax purpose in hands of HUF, so if the total premiums for insurance requirement of family is Rs.50,000 per year, then It can go from HUF income and also the individual can exhaust his 1 lac limit separately via PPF, ELSS and other tax instruments. while trading is done by used from HUF income and hence it will leave other members with more disposable income which one can use to if required.


#60

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
    1. They are the only members of HUF.
    2. Karta to have sole authority over HUF account
    3. 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