Forming an HUF: Deed, PAN and Bank Account

A man marries, signs a “deed of declaration” before a notary, applies for a PAN in the family’s name, opens a bank account, and believes that an HUF now exists. The paperwork gives the family a tax identity. It does not create the family, and it does not decide whose income the family’s income is. Both points are settled by Hindu law, which the Income-tax Act adopts. Most disputes about a “new” HUF are about the second point: the PAN was allotted, the returns were filed, and years later the Assessing Officer taxed the income as the karta’s own. This guide sets out what the law requires, what the PAN application needs, and where the trouble usually starts.

Which Act governs which year

• Assessment year 2026-27 (financial year 2025-26) and earlier. The Income-tax Act, 1961 applies. A Hindu undivided family is a “person” under section 2(31)(ii). PAN is governed by section 139A and rule 114 of the Income-tax Rules, 1962.
• Tax year 2026-27 onwards. The Income-tax Act, 2025 applies from 1 April 2026. A Hindu undivided family is a “person” under section 2(77)(b). PAN is governed by section 262 and rule 158 of the Income-tax Rules, 2026.
• Section 536(2) of the 2025 Act repeals the 1961 Act but saves “anything duly done or suffered thereunder”. A PAN allotted under section 139A remains the HUF’s PAN. Section 262(8) adds that a person who already has a PAN “cannot apply, obtain or possess another”.

The Act does not define an HUF

Neither Act defines “Hindu undivided family”. Both list it among the persons who are taxed, and leave its meaning to Hindu law. The Supreme Court said so in Surjit Lal Chhabda v. CIT (6 October 1975, (1975) 101 ITR 776). The expression “must be construed in the sense in which it is understood under the Hindu law”. Three consequences follow from that judgment.

An HUF cannot be created by agreement. The Court held that the joint family “is thus a creature of law and cannot be created by act of parties, except to the extent to which a stranger may be affiliated to the family by adoption”. A deed or affidavit does not bring an HUF into being. It records a family that already exists, and its members.

One male member is enough. The family is wider than the coparcenary. It “consists of persons lineally descended from a common ancestor and includes their wives and unmarried daughters”. On the facts, Surjit Lal, his wife and his unmarried daughter were held to constitute a Hindu undivided family, even though he could not form a coparcenary with them. The Court relied on its earlier decision in Gowli Buddanna v. CIT (10 January 1966, (1966) 60 ITR 293). There, after the father’s death, the family consisted of an adopted son, his widowed mother and two unmarried sisters. The property had been the family’s during the father’s life. It was held that the property “still continued to belong to that undivided family”, and its income was taxable as the HUF’s.

Having an HUF is not the same as having HUF income. This is the part of Surjit Lal that is easy to miss, because the taxpayer lost. He had made a sworn declaration in January 1956 throwing a property, Kathoke Lodge, into the “family hotchpot”, and claimed that its rent was the HUF’s income. The Court accepted that the family existed and that the declaration was genuine. It still held the rent taxable as his individual income. The property had not come from a pre-existing joint family. He had no son who could take an interest in it by birth, and his wife and daughter had only a right of maintenance, which the declaration did not enlarge. “He can deal with it as a full owner”. The Court drew a line between two kinds of case:

• property of a subsisting joint family that comes into the hands of a single coparcener keeps its character (the Gowli Buddanna rule); and
• property that first becomes “joint” when an individual throws it into the common stock is tested by the composition of the family. The “mere existence of a wife and daughter” does not make its income the family’s.

Two cautions apply to that reasoning today. First, the judgment turned on the absence of a son. Section 6 of the Hindu Succession Act, 1956, as substituted by the Hindu Succession (Amendment) Act, 2005, now provides that the daughter of a coparcener “shall by birth become a coparcener in her own right in the same manner as the son”. In Vineeta Sharma v. Rakesh Sharma (11 August 2020), the Supreme Court held that the substituted section confers that status on a daughter born before or after the amendment. How Surjit Lal applies to a family whose only child is a daughter has not been settled by the Supreme Court in any judgment this guide has found, and the guide does not answer it. Second, for property converted after 31 December 1969, the income from property thrown into the common stock by a member is in any case taxed in that member’s hands under section 64(2) of the 1961 Act and section 99(3) of the 2025 Act. The next guide but one, on gifts and clubbing, deals with that.

Where the HUF’s property comes from

Because the declaration alone does nothing, the useful question is what property the HUF holds and how it came to hold it. The usual sources are:

• ancestral property, or property received by a coparcener on a partition of a larger family, which he holds with his own branch;
• gifts to the HUF from relatives or others, discussed in Gifts to an HUF and the Clubbing Rules; and
• income earned on those assets and reinvested by the karta.

Property thrown in or gifted by a member is HUF property, but its income is clubbed back to that member under section 64(2) or section 99(3). A deed that lists only such property creates an HUF return with little or no income of its own.

Applying for the PAN

Who must apply. Section 139A(1) of the 1961 Act and section 262(1) of the 2025 Act require every “person” to apply where, among other things, its total income exceeds the maximum amount not chargeable to tax, or it must file a return. Any person may apply voluntarily under section 139A(3) or section 262(2). An HUF that holds income-producing assets ordinarily needs a PAN before it can open a bank account in its own name, as the next section explains.

The form.

• Under rule 114 of the Income-tax Rules, 1962, an HUF applied in Form No. 49A, the form for “Indian Citizens/Indian Companies/Entities Incorporated In India/Unincorporated Entities Formed In India”. Its item 10 lists “Hindu undivided family” among the statuses. Item 5 asks for a date (“Date of Birth/Incorporation/Agreement/Partnership or Trust Deed/Formation”), and item 6 (parents’ names) is “applicable only for individual applicants”.
• Under rule 158(1) and the Table in rule 158(8)(b) of the Income-tax Rules, 2026, an HUF applies in Form No. 94. Form No. 93 is for an individual who is a citizen of India. Form No. 96 is for applicants formed or registered outside India. The 2026 Rules as published do not reproduce the forms themselves, and this guide has not seen Form No. 94. Rule 158(2) also allows an application through a common application form notified by the Central Government.

The documents. Both sets of rules require the same two things for an HUF.

Requirement	Rule 114(4), 1962 Rules (Table, Sl. No. 2)	Rule 158(8)(b), 2026 Rules (Table, Sl. No. 1)
Karta’s affidavit	Stating “the name, father’s name and address of all the coparceners on the date of application”	Original affidavit by the karta, “duly authenticated by a Notary Public or Oath Commissioner or Judicial Magistrate”, stating the name, father’s name, Aadhaar number or PAN, and address of all the coparceners
Karta’s identity	A copy of any document applicable to an individual citizen, “in respect of karta”, as proof of identity, address and date of birth	The same, by reference to the individual’s documents in rule 158(8)(a)

The 2026 rule adds the authentication requirement and the coparceners’ Aadhaar or PAN. It asks for coparceners only. Female members who are not coparceners, such as the karta’s wife, are not listed in the affidavit.

The karta signs. The application is the HUF’s, but every document in it is the karta’s. The declaration in Form No. 49A (item 16) reads “I/We …, the applicant, in the capacity of …”, followed by the signature box. For an HUF, the karta signs in the capacity of karta. The HUF has no Aadhaar number of its own. Section 262(5) of the 2025 Act requires Aadhaar to be quoted only by a person “eligible to obtain Aadhaar number”, which an HUF is not.

Time. Rule 158(7) of the 2026 Rules sets the time by the condition that applies. For a person whose total income exceeds the exemption limit, it is 31 May of the tax year following the year in which that income is assessable (Table, Sl. No. 1). For a person required to file a return, it is “before the end of the tax year” (Sl. No. 3). Rule 114(3) of the 1962 Rules was built the same way.

Opening the bank account

The Income-tax Act does not regulate how a bank opens an HUF account. That is a matter between the bank and the family, under the bank’s own account-opening and KYC requirements. The Act’s role is the PAN. Under rule 159(1) of the Income-tax Rules, 2026, every person must quote its PAN in documents for “opening an account other than a time-deposit … and a Basic Savings Bank Deposit Account” with a banking company or a co-operative bank (Table, Sl. No. 12). The account is opened in the HUF’s name, with the HUF’s PAN, and is operated by the karta.

What the account does for tax purposes is evidential. HUF income received into it, and HUF expenses paid from it, support the claim that the income is the family’s. Mixing the karta’s salary or his own investments into the HUF account, or the reverse, is what usually leads to the income being treated as his.

What to have ready

• A family tree showing the karta, every coparcener and the other members, with dates of birth. Daughters of a coparcener are coparceners under section 6 of the Hindu Succession Act, 1956 as substituted in 2005.
• The karta’s affidavit naming the coparceners, notarised as rule 158(8)(b) requires.
• The karta’s identity, address and date-of-birth documents.
• A record of the HUF’s opening assets and their source: ancestral property, a partition deed of a larger family, or a gift deed from a relative who is not a member.
• The HUF’s PAN, before the bank account is opened.

In order

1. The family identifies the HUF it already is: the karta, the coparceners and the other members. No deed creates it.
2. It identifies the property that is genuinely the family’s, and its source. Property thrown in by a member is the HUF’s, but its income stays taxable in that member’s hands.
3. The karta swears an affidavit naming the coparceners, and has it notarised.
4. The karta applies for the HUF’s PAN in Form No. 94 (2026 Rules), or Form No. 49A before 1 April 2026, signing in the capacity of karta.
5. The bank account is opened in the HUF’s name, quoting its PAN, and is kept separate from every member’s own money.

The next guide, The HUF’s Return and the Regime Choice, covers which ITR form the HUF files, who verifies it, and how the new regime applies to an HUF.