Terms used in HUF

Misc | admin | June 24, 2011 at 8:12 am

Here are the terms that you should be familiar with.

Karta

As the eldest male in the family, he is the CEO of the HUF. He invests and spends on its behalf and is responsible for maintaining accounts.

Co-parceners

All male lineal descendants of the karta and his daughters are co-parceners in the HUF. All co-parceners have equal rights in the HUF and can demand its partition.

Members

Wives of kartaand male co-parceners in the HUF are its members. A member has right over the property but cannot demand partition. Grandaughters too are members.

Dayabhaga

Under this system, the father is the sole and exclusive owner of the family property. No member can enforce the partition of the HUF so long as he is alive. This is followed in West Bengal and Assam.

Mitakshara

Under this system, this property belongs to the HUF, not to any individual. It can, therefore, be partitioned even during the lifetime of the karta. The rest of India (except Kerala) follows this system.

Partition

HUF can be partitioned by dividing the assets among the co-parceners . This is done according to the Hindu Succession Act. The partition of the HUF assets does not attract any capital gains tax.

Family hotchpot

The term used to define the corpus of the HUF. Once an asset enters the hotchpot, it can only be withdrawn at the time of the final partition of the HUF.

Source: Economic Times