HUF bank account is quintessential for Hindu Undivided Families or HUF. If any undivided Hindu family wishes to start a business, they can do so only after they have signed up for a bank account with the Karta's official signature on a rubber stamp.

In this article, you will get information on how to open a HUF bank account and learn about the benefits of having an HUF bank account.

There are a few prerequisites to check before you start to sign formalities to open a HUF bank account. These are as given below:

Prerequisites for Opening a HUF Bank Account

• Choosing a private bank or government financial institute, for opening a HUF bank account is important to decide.
• Determine the type of bank account you wish to open. This could be a current account, or a savings account, as you deem fit.
• Banks may not allow nominations to be added to the bank account. Therefore, it is suggested to keep more than one individual along with Karta to operate the account.

Next, follow the laid down step-by-step detailed procedure of the HUF bank account opening procedure.

Steps to Open an HUF Bank Account

Here is the step-by-step guide to opening an HUF bank account:

The documents needed usually pertain to the Karta of the HUF, the one who will take primary charge of the HUF account.

The different documents required for opening an HUF account are mentioned as follows:

• Name of the HUF, or the Hindu Undivided Family.
• Membership and list of the coparceners of the HUF account.
• Personal details, such as mobile number and email address.
• Address proof, such as an Aadhaar card, driving licence, passport, or voter ID card. Your Aadhaar should be linked with the PAN of the HUF.
• The PAN card of the person who will be in primary charge of the HUF bank account is mandatory to be submitted.
• A PAN card in the name of the HUF.
• The size of the photographs needed will be mentioned to you as per the respective bank's requirements.
• A signed declaration mentioning the Karta and the coparceners, who will be in charge of operating the bank account.

All the above documents must be duly self-attested before submitting to the bank. Now, let us see the eligibility requirements that RBI has mandated for opening a HUF bank account.

Fulfilling the following eligibility criteria will help you start applying for a HUF bank account:

• First and foremost, to be identified as a HUF there must be coparceners. The coparceners stay through the years before any coparcener claims a partition in the ancestral property of the family.
• A HUF must have a joint family property. It may consist of ancestral property, other property acquired with the help of having an ancestral property, and any property that has been transferred by the members of the HUF.
• People of a Hindu family who have lineally come from a common ancestor are eligible to sign up for a HUF bank account. This also includes any wives and unmarried daughters of the mentioned person.
• Those who belong to Sikh and Jain families are also eligible to apply for opening a HUF bank account.

Now, let us seek what benefits you can acquire from having a HUF bank account.

HUF bank account benefits that you can avail of are as follows:

• Exemptions and deductions in tax pay under Section 80. A HUF generally pays 30 percent less tax compared to other individual taxpayers.
• As one family is collectively considered a single entity for opening a HUF bank account, it reduces the burden of paying taxes individually.
• If the Karta retires or passes away, it doesn’t affect the existence of the HUF as it carries forward seamlessly.
• Members can take leverage of paid house rent, reimbursements in loans, and multiple others.

The demerits of opening a HUF bank account are as follows:

• Closing a HUF account is more difficult than opening one. Any proportion of partition in the HUF will lead to a tedious task of account asset distribution among all members. To break an HUF requires proper consent in documentation from all the members of the HUF.
• As a tax-saving entity, the identification of a HUF is washing away with rising disputes and the lesser want of living in a joint family being one of the main reasons.

To sum up, the above-mentioned gist allows one to know the details of opening a HUF bank account and the advantages tagged along with it. Furthermore, knowing all the prerequisites can ensure seamless opening of account and uninterrupted operations.