The Act acknowledges a HUF as a distinct assessable entity. If the two requirements listed below are met, its income may be evaluated:

 A coparcenership ought to be established. It is important to note in this regard that once a joint family income is determined to be that of HUF, it remains so in consecutive assessment years until coparceners demand partition.

Ancestral property, property obtained with the help of ancestral property, and property transferred by its members should all be included in the joint family property.

 Karta is in charge of it.

A man's inheritance from any one of his three direct male ancestors—his father, grandpa, and great-grandfather—is referred to as ancestral property. Property inherited from any other relationship is therefore not considered ancestral property. The following families' ancestral property income is subject to HUF taxation:

a) A widowed mother and sons (either minor or major);

b) A husband and wife couple without children;

c) Two widows of brothers who have passed away;

d) A family with two or more brothers;

e) An uncle and nephew;

f) A mother, son, and son's wife;

g) A man and his late brother's wife

Any property that a daughter acquires from joint family property will be considered her exclusive property. Any resulting income is subject to taxation only in her individual status. Any legal heir who acquires property in the role of a descendent will likewise be subject to this.

HUF prepares a different tax return and has its own PAN. Since it has an entity distinct from its members, a separate joint Hindu family business is established.

The HUF may include section 80 deductions and other exemptions in its income tax return.

HUF is able to purchase a life insurance coverage for its members.

Members of HUF who contribute to the operation and activity of the joint Hindu family business are eligible to receive salaries. It is possible to deduct this wage expense from HUF's revenue.

HUF's income can be used to make investments. The HUF is responsible for paying taxes on any returns from these assets.

The same taxes apply to a HUF as they do to a person.

Members and a HUF are subject to different taxes. As a result, it can independently claim exemptions permitted by the tax laws or deductions (such those under section 80). For instance, if you, your spouse, and your two kids decide to form a HUF, you can all claim a section 80C deduction, as can the HUF. Families typically use HUF to accumulate assets.

The senior male member of the family, known as the Karta, is the head of the HUF.

Indeed! The HUF Karta could not be a woman until January 2016. However, the Delhi High Court decided in favor of a woman serving as the Karta of a HUF in a historic Expert'se. Nevertheless, the Income Tax Act has not yet included this.

Every member of the Karta family is eligible to join the HUF. The female members are referred to as simply members, and the male members are termed coparceners. The distinction between the two is that any coparcener has the right to request that the HUF be divided. With the exception of a few states, such as Tamil Nadu and Maharashtra, which let unmarried daughters to serve as coparceners, the majority of the country does not provide female members this privilege.

The following incomes are exempt from HUF taxes:

 Income from self-acquired property is not taxable in the HUF's hands if a member transfers it to the organization without getting the appropriate sale consideration. The member will still be responsible for paying taxes on it.

Members' personal income is not considered HUF income.

 Since "Stridhan" is a woman's exclusive property, its profits are not subject to HUF taxation.

 Even if a daughter vested her personal property in HUF, the income from that property is not taxable in HUF's hands.