What is HUF

A Hindu Undivided Family (HUF) is a legal entity recognized under Hindu Law in India. It consists of a family group comprising individuals who are lineally descended from a common ancestor and include their wives and unmarried daughters. The property owned and income generated by the HUF is considered as belonging to the family as a whole, rather than to any individual member.

Key features of an HUF include:

• Common Ancestral Link: All members of an HUF must be lineally descended from a common ancestor. This ancestor can be anyone from whom the family has descended through male lineage.
• Joint Ownership: Property, assets, and income of the HUF are held jointly by all its members. This means that individual members do not have separate ownership rights over specific assets; rather, they have a collective interest in the entire estate.
• HUF Status: An HUF is recognized as a separate tax entity under the Indian Income Tax Act, 1961. It is eligible to avail of tax benefits and exemptions available to Hindu Undivided Families.
• Partition: While an HUF represents a joint family, it can be partitioned at any time by its members. Partition involves the division of assets and separation of individual interests, converting the HUF into smaller, independent units.
• Succession Planning: HUFs are often used as a vehicle for succession planning and wealth management within Hindu families. Through proper planning and execution, assets can be preserved and transferred across generations while minimizing tax liabilities

Overall, the concept of an HUF provides a legal framework for managing family assets and income in a joint manner, in accordance with Hindu customs and traditions.