No Indian law gives a concrete definition of the term ‘Hindu Undivided Family’. For the purpose of Hindu Law, HUF is an entity identified by the following features:
- Members of the HUF must be ‘Hindu’ as defined under Hindu Law, which includes Sikhs, Jains, and Buddhists along with Hindus.
- Members should form a family, i.e. they should be related to each other through blood or marriage. Therefore, an HUF cannot be contractually created.
- The family should be ‘undivided’, i.e. it should be a joint Hindu family where partition has not been affected.
For the purpose of taxation, a HUF is considered a ‘person’ under the Income Tax Act.1 This means that an HUF’s tax liabilities are computed separately from those of its individual members. An HUF’s taxable property consists of:
- Ancestral property
- Property acquired with the aid of ancestral property
- Property transferred by members of HUF
- Section 2(31), Income Tax Act, 1961