Page 53 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes It is a running account in which customers are free to make any number of transactions subject
to maintenance of minimum balance in the account. The target group of current account is one
of business segment.

10. Hindu Undivided Family (HUF)

HUF is a family with husband, wife and children (and children’s spouses if any) living together.
The property owned by this family will be through lineal ascendants or any ancestors. There are
a set of laws that govern property ownership, marriages, taxation etc for a legally declared HUF.
IT department of India has a format of taxation for a HUF; tax benefits can be availed from this
format.
HUF Accounts
Karta of a HUF is the senior most male member of the family and in financial terms he can also
be called manager of the family. In this account a corpus is created where every family member
can pool their income. The corpus will be handled by or authorized to handle by Karta (head of
the family). Signature of karta will be required for every transaction from the bank. These
accounts are similar to individual saving bank accounts; there will be various tax benefits that
are available for an individual’s account while the income of members is being pooled in HUF
account.
Features of HUF Account

There are a few features of HUF account that makes it different from regular saving bank
accounts.

Every member of the family can deposit their income in the common corpus
Single person’s authority while participation from entire family
Tax benefits on deposits under various sections
Corpus can be divided only on agreement of every coparcener of the family
Documents required for opening HUF account:

There are few documents that will be required for opening an HUF account.
HUF will have a unique PAN card; this PAN card along with the PAN of Karta should be
produced.

A declaration form will be provided where every member has to make a signature stating
the name of Karta and declare

They are the only members of HUF.
Karta to have sole authority over HUF account
Every transaction on behalf of HUF account, made by each member of the family is
governed by karta.

Residential proof of Karta
Identification proof of Karta
Apart from the points mentioned above there can be other documents or conditions depending
on the bank where HUF account is opened.

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