Query 1]

Sir, I have some queries. My father wants to create his H.U.F.

  1. How HUF can be created?
  2. Whether all children and their children become member automatically? Or he can specify who will be member of his HUF?
  3. If he can specifies the members then my father wants HUF with one son and one daughter and their children as members and mother wants both sons and both daughters and their children as members. Whether both can create their HUF? Please reply in tax talk column in Hitavada. []


The Hindu Undivided Family (HUF) has its roots in the ancient Hindu law. HUF is not a creation of contract. It is purely a creation of Hindu Law. HUF, which is short form of Hindu Undivided family or Joint Hindu Family, is a body consisting of persons lineally descendant from a common ancestor, including their wives and unmarried daughters, who are staying together jointly; joint in food, estate and worship.

The daughter, on her marriage, ceases to be a member of her father’s HUF and becomes a member of her husband’s HUF. Birth of a son in a Hindu joint family automatically makes him a member of the HUF. Normally, it cannot be “created” by act of parties. Existence of property or multiple members is not a pre-requisite to create HUF.
In view of above basic concept:
a] There is no right/ choices of specifying who the members of HUF are & who are not.
b] All children and their children normally becomes the member of HUF automatically
b] Creating two HUF, one of father and the other one of Mother is not possible.
Creating Income Tax File of HUF:

A family which does not own any property may still have the character of Hindu joint family. In normal course, the question of creating a HUF, in the strict sense of the term, does not arise. What is normally created is a nucleus to a HUF.

The initial nucleus or corpus of the HUF can generally come out of the following:

a] Partition of a larger HUF.
b] Receipt of gift.
c] Passing of the property through a will. Etc

If someone have an ancestral property and earning some income from this property, then it is better to transfer this asset to HUF & treat the income as income of the HUF to have a better tax planning.

One may note that a gift received by the HUF in excess of Rs 50,000/- p.a. from stranger in aggregate will be deemed as the income of the HUF & will be taxed accordingly.

The income from property of HUF can be further invested in instruments such as shares, mutual funds, etc. and will be assessed under HUF.  Any gifts received by the members of HUF (birthday, marriage, etc.) can be treated as assets of HUF.


Query 2]
I would be grateful if you give further clarification on Tax Talk dated 01.11.2010. As opined therein, only income generated from funds of HUF is assessed as HUF income. I want to know if I start HUF and give my funds to my HUF as loan with interest, will income from such investment of funds will assessed as HUF income or not? []
  1. If any member of the HUF transfer his own assets to HUF without consideration (i.e., throw his assets to the common hotchpotch), income from such assets would be taxable in the hands of individual transferring the assets and not in the hands of HUF [Section 64(2)].
  2. If you give interest bearing loans to your HUF, Income earned by the HUF out of the funds so advanced will be taxable as income of the HUF only and will not attract the clubbing provision of section 64(2).

Query 3]

A PPF account was opened in the name & style of “Ashok Manwani HUF” in the year 1997 and is still continued.  I understand that with amendments in PPF rules, now PPF account can not be opened in HUF’s name.  How the HUF can invest in PPF and take benefit of section 80C? Can I continue the same account for next 5 years? []


  1. A PPF account is not allowed to be opened by HUF w.e.f. 13.5.2005. However, all the accounts which were opened earlier will continue to earn interest till their maturity.
  2. The maximum amount of Rs.70,000/- can be deposited by a person in a financial year in the following PPF account taken together:
    i) in his name
    ii)  in the name(s) of a minor(s)
    iii) in the HUF A/c
  3. No further extension of existing PPF A/c of HUF is possible.
  4. (a) Subject to the maximum cap of Rs. 70,000/- per PPF A/c., HUF can claim the deduction u/s 80C by depositing in the PPF A/c of the members of the HUF.
    (b) Further, HUF can use other investment options u/s 80C (like Investment in ELSS, LIC etc) to claim deduction u/s 80C.


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