Format of HUF Deed in India: Meaning, Contents, Documents and Sample Format
A Hindu Undivided Family (HUF) is a separate taxable entity recognised under Indian income-tax law. An HUF can have its own PAN, bank account, investments and income-tax return. The Income Tax Department currently recognises HUF as a separate PAN category, with the fourth character of an HUF PAN being “H”.
A properly prepared HUF deed can be useful for documenting the constitution, members, Karta and affairs of the HUF, particularly when opening a bank account or maintaining records.
What is an HUF Deed?
An HUF deed is generally a written declaration describing the existence and details of the Hindu Undivided Family. It normally identifies the Karta and family members, states the name of the HUF and records how the HUF will hold and manage its assets and income.
The deed is primarily a documentary record. The existence and legal status of an HUF ultimately depend on the applicable Hindu law and the facts of the family, rather than merely on executing a document.
What Details Should an HUF Deed Contain?
A practical HUF deed format may include the following information:
Name of the HUF
Name and address of the Karta
Father's name of the Karta
Names and details of coparceners and other members
Date of declaration/constitution
Address of the HUF
Details regarding initial HUF assets or capital, wherever applicable
Authority of the Karta to manage HUF affairs
Bank account and investment-related provisions
Signatures of the Karta and members
Signatures of witnesses
The deed should accurately reflect the actual family structure and should not contain artificial or incorrect declarations.
Who is the Karta of an HUF?
The Karta is the person responsible for managing the affairs of the HUF. The Karta generally represents the HUF in financial, banking and tax-related matters.
The HUF's PAN documentation also requires information concerning its coparceners. Current Income Tax Department guidance specifies an affidavit by the Karta stating the name, father's name and address of all coparceners on the date of application, along with the Karta's applicable identity and address proof.
Sample Format of HUF Deed
A commonly used structure can begin as follows:
HINDU UNDIVIDED FAMILY DEED
“This Deed of Declaration is made on this ___ day of ____, 20 by Shri ____________, residing at ____________, hereinafter referred to as the Karta of the Hindu Undivided Family.”
The document can then specify the Karta and members, followed by clauses relating to the name of the HUF, management by the Karta, ownership of HUF assets, operation of bank accounts and other administrative matters.
The final portion may contain the signatures of the Karta, members and witnesses.
Is an HUF Deed Mandatory?
There is an important distinction between creation of an HUF under Hindu law and preparation of a written HUF deed.
A deed may be useful as documentary evidence and for completing practical requirements of banks and other institutions. However, merely signing an HUF deed does not by itself create an HUF if the underlying legal requirements are not satisfied.
For PAN purposes, the Income Tax Department specifically prescribes documentation relating to the HUF and Karta.
HUF and Income Tax Return
An HUF can have income taxable separately from the individual income of its members, subject to the applicable provisions of the Income-tax Act. The Income Tax Department provides separate return options for HUFs, including ITR-2, ITR-3 and ITR-4, depending on the nature of income and eligibility.
Therefore, proper documentation, separate records and appropriate tax compliance are important when operating an HUF.
Download HUF Deed Format
A practical HUF Deed Format can be used as a starting point for preparing the declaration containing the Karta, members, address and other relevant particulars.
The exact wording and stamp-paper/notarisation requirements may vary depending on the purpose and applicable state requirements. It is advisable to verify the applicable requirements before execution.
Disclaimer
This article is for general informational purposes only and does not constitute legal, tax or professional advice. HUF-related requirements may depend on applicable Hindu law, income-tax provisions and state-specific requirements. Readers should verify the applicable provisions and seek professional advice where necessary.
