Hindu law governs what is referred to as a “Hindu Undivided Family” (HUF). A HUF cannot be founded by an agreement between two parties or by a group of individuals who are not related to one another. Even after the passing of the last common ancestor, the HUF continues to exist, and the next-oldest male or female becomes “Karta,” or the head of the family. While HUF is taxed individually, you can reduce your tax burden by forming a family unit and pooling your assets. A HUF alone, not any of its coparceners or members, determines how much income is to be taxed.

Conditions to be fulfilled to create an HUF:

• Families should be the sole group to form HUFs.
• Upon marriage, an HUF is automatically created for the newly additional family member.
• HUF in general consists of a common ancestor and all of his descentors including their daughters and wives.
• Buddhists, Jains, Hindus, and Sikhs are able to form HUF.
• HUF often has assets that come as will, gift or ancestral property,
• Once the HUF is created, the bank account should be created in the name of the HUF. A PAN number will be generated in the name of HUF.