thank you sir for your reply. if friend is secondary holder of joint bank account & he applies through IPO ASBA from joint account …will his IPO application consider Valid?
Note - in this scenario, he has individual demat account & his another individual bank account is linked to demat. But he’s applying for IPO from joint bank a/c where he’s secondary holder.
HUF stands for Hindu Undivided Family, which is a separate legal entity under Indian income tax law. It can be formed by a Hindu, Sikh, Jain, or Buddhist family. The eldest male or female member acts as the Karta, and other family members are coparceners.
A HUF can open a trading and demat account and invest in stocks, mutual funds, and other securities under its own PAN.
Advantages of Opening a Trading/Demat Account as a HUF:
- Separate PAN & Tax Benefit
- HUF is taxed separately from its members. So, it gets a separate ₹2.5 lakh basic exemption limit, and can claim deductions like any other taxpayer (under sections like 80C, etc.).
- Asset Segregation
- Investments and income earned through HUF are distinct from personal income, allowing for better estate and tax planning.
- Better Utilization of Tax Slabs
- Families with multiple income sources can reduce their total tax outgo by distributing income between individual and HUF entities.
- Succession Planning
- Assets in the HUF can continue across generations without requiring a will.
Documents Required for Opening HUF Trading/Demat Account:
Unlike individuals, a few extra documents are needed:
- HUF PAN card
- Declaration/Deed of HUF formation (stating Karta and coparceners)
- Identity and address proof of the Karta
- Bank account in the name of HUF
- KYC documents as per broker’s policy
Conclusion
Opening a trading/demat account in the name of HUF is legal and can offer tax-saving and planning advantages. However, the account must be managed by the Karta and income must arise from assets owned by the HUF—not diverted from personal income. Seeking professional help from any industry expert such as Setindiabiz is always a better option to get your HUF registered hassle-free!