Hindu Undivided Family
(HUF) Business Setup
Online in India
India's most tax-efficient family business structure. Create a separate legal entity for your family — save income tax, manage family wealth, and secure succession — all with expert CA assistance.
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What is an HUF?
A Hindu Undivided Family (HUF) is a unique legal entity recognised only in India under the Hindu Law. It consists of all persons lineally descended from a common ancestor.
- Recognised by Income Tax Act as a separate tax entity
- Gets its own PAN card, bank account & investments
- Applies to Hindus, Buddhists, Jains & Sikhs
- Karta (head) manages the family's HUF assets
- Coparceners inherit equal rights in HUF property
- No registration required — only deed + PAN
A Separate Tax Entity for Your Family
When you marry, you automatically become eligible to form an HUF. By doing so, your family gets a completely separate income tax return with its own ₹2.5 lakh basic exemption and deductions — in addition to your personal return.
This means a salaried or business person paying 30% tax on ₹10 lakh income can shift family income (rent, interest, agricultural income) to HUF and pay zero tax on the first ₹2.5 lakh — saving up to ₹75,000+ each year legally.
Rahul earns ₹18L salary. His HUF earns ₹5L rent from ancestral property. Without HUF, he pays ~₹1.5L tax on that rent. With HUF — he pays ZERO. That's ₹1.5L saved every single year, legally.
Why Set Up an HUF?
An HUF offers powerful legal, financial, and succession benefits unique to Indian families.
Extra ₹2.5L Tax Exemption
HUF gets its own basic exemption of ₹2.5L (₹3L for senior Karta), Section 80C deductions up to ₹1.5L, and HRA — completely separate from your personal return.
Ancestral Property Management
Legally hold, manage, and transfer ancestral property under the HUF name. Rental income from such property is taxed in HUF's hands at lower rates.
Investment in HUF Name
HUF can invest in FDs, stocks, mutual funds, PPF, and real estate. Returns are taxed separately, effectively splitting family income across two entities.
Dedicated Bank Account
Open a current account in HUF's name (e.g. "Rahul Kumar HUF") to keep business and family finances clearly separated — essential for tax purposes.
Family Succession Planning
HUF ensures your family wealth passes seamlessly to the next generation without going through probate or lengthy inheritance disputes.
No Minimum Capital Required
Unlike a company, there's no minimum capital requirement or annual compliance filings. Simply file one ITR per year for the HUF entity.
How Much Can You Save?
Here are common income sources families route through HUF to save tax legally under the Income Tax Act.
- Section 80C Life insurance premium paid by HUF — deduction up to ₹1.5L
- Section 80D Health insurance for HUF members — up to ₹25,000 deduction
- Rental Income Rent from ancestral property taxed in HUF, not individual
- Agricultural Agricultural income fully exempt in HUF entity
- Capital Gains Long-term capital gains exemption limit applies separately
- Gift Tax Gifts from relatives to HUF up to ₹50,000 are tax-free
Who Are the Members?
Understanding roles in an HUF is essential before setup. The structure is governed by Hindu Personal Law.
Karta — The Head
The senior-most male member (or female after 2016 amendment) who manages the HUF. The Karta represents the HUF in all legal, financial, and tax matters. Signs all documents, opens bank accounts, and files ITR on behalf of HUF.
Coparceners — Equal Owners
Members who have an equal birthright in HUF property. In 2005, daughters were given equal coparcenary rights. Coparceners can demand partition but cannot sell HUF property without consent of all members.
Female Karta Now Allowed
Post a landmark Delhi HC judgment in 2016, a Hindu woman (widow, unmarried daughter) can be the Karta of an HUF. Daughters have equal coparcenary rights since 2005 amendment to Hindu Succession Act.
Lineally Descended Members
Every child born into a Hindu family automatically becomes a member of the HUF by birth. Minor members can also hold shares. A new HUF can be created even by a newly married couple with no children.
How TaxClue Sets Up Your HUF
Our CA handles everything end-to-end. You only need to provide documents and sign the deed.
Free Consultation Call
Our CA understands your family income structure, assets, and the best way to set up HUF for maximum tax savings.
HUF Deed Drafted
We draft the HUF Deed on stamp paper — declaring Karta, members, initial capital contribution, and HUF name (e.g. "Rahul Kumar HUF").
PAN Card Applied
We apply for a separate PAN card for your HUF entity at the Income Tax department. Usually issued in 5–7 working days.
Bank Account Opened
With the HUF deed and PAN, we guide you to open a dedicated HUF current account. All HUF transactions flow through this account.
HUF vs Other Business Structures
| Parameter | HUF | Pvt. Ltd. | Sole Proprietorship |
|---|---|---|---|
| Applicable To | Hindu Families | Anyone | Anyone |
| Separate PAN | ✓ Yes | ✓ Yes | ✗ No |
| Own Tax Return | ✓ Yes | ✓ Yes | ✗ No |
| ₹2.5L Extra Exemption | ✓ Yes | ✗ No | ✗ No |
| Additional 80C Limit | ✓ ₹1.5L | ✗ No | ✗ No |
| Registration Required | Deed + PAN only | MCA Filing | Minimal |
| Annual Compliance | ITR only | ROC + Audit | ITR only |
| Setup Cost | Very Low | Moderate | Nil |
| Succession Planning | ✓ Built-in | ✓ Via shares | ✗ Limited |
Your Trusted HUF Partner
5-Day PAN Guarantee
HUF PAN card applied and received within 5–7 working days — we track it for you.
Maximum Tax Saving Plan
Our CA audits your income and suggests which income to route via HUF for optimal savings.
Deed Drafted by Experts
Legally sound HUF deed covering all members, initial contribution, and Karta rights — ready to notarise.
100% Online
No office visits needed. Share documents via WhatsApp, sign digitally. Done from home.
Bank Account Guidance
We guide you to the right bank and prepare the document set for instant HUF account opening.
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5,000+ Indian families trust TaxClue for their compliance and tax-saving needs.
Frequently Asked Questions
Related Services
Pvt. Ltd. Registration
Run a scalable business alongside your HUF for liability protection.
Learn MoreIncome Tax Filing (ITR)
File HUF's annual ITR correctly and claim all eligible deductions.
Learn MoreSet Up Your HUF & Save ₹75,000+ Every Year
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