A Hindu Undivided Family (HUF) is a distinct tax entity under the Income‑tax Act, 1961. Similar to an individual, an HUF can create a demat account to hold and trade securities—equities, mutual funds, bonds, and ETFs—under one family umbrella. The Karta, or head of the family, manages this account with the agreement of all coparceners (family members holding property rights by birth).
Opening a demat account on behalf of an HUF enables families to manage investments collectively and can lower the overall tax load. Here is a straightforward, step-by-step process.
What Is a HUF Demat Account?
- Separate Legal Entity
An HUF has its own PAN and files independent tax returns. - Operated by the Karta
The Karta signs trades and manages investments on behalf of all coparceners. - Collective Wealth Building
Family members pool funds to invest together in securities for long‑term growth.
Key Benefits
- Tax Efficiency
- Enjoy HUF’s own tax slab and deductions, reducing the family’s combined tax outgo.
- Consolidation of Wealth
- One account makes it easy to track and manage all family investments.
- Shared Participation
- Coparceners can jointly decide on investment choices under the guidance of the Karta.
Documents Required
For HUFs without registered KYC
- HUF Declaration and annexures
- Self‑attested PAN copies: HUF, Karta, all coparceners/members
- Address proof: Karta and HUF
- Bank proof: cancelled cheque or statement
- Income proof (one of):
- Last six months’ bank statements
- Latest ITR acknowledgment
- Audited P&L statement with UDIN
- DP holding statement or net‑worth certificate
- Self‑declaration & NOC if Karta is female
- Non‑individual account declaration
For KYC‑registered HUFs
- HUF Declaration and annexures
- PAN copy: member/coparcener
- Bank proof
- Income proof
- Declaration & NOC if female Karta
- Non‑individual account declaration
If the Karta is an NRI (Not supported by Groww at present)
- Notarised PAN and address proofs
- Valid passport/visa or OCI/PIO/resident card
- FATCA & FEMA declarations
Step‑by‑Step Guide to Opening Your HUF Demat Account
- Choose a Broker
Select a depository participant (DP) or broker that supports HUF demat accounts. - Gather Documents
Collect all forms, declarations, PAN cards, address proofs, bank proofs, and income proofs as listed. - Complete the Application
Fill in the HUF demat account form carefully. Check details like names, relationships, dates of birth, and signatures. - Submit for Verification
Send the form and documents to your chosen broker or DP. - Account Activation
The DP will perform KYC, document checks, and in‑person verification (if required). Once approved, you’ll receive your demat account details.
Things to Remember
- Accuracy Matters: Ensure all names, dates, and relationships match official proofs.
- Optional HUF Deed: Some DPs may ask for your HUF deed—keep a self‑attested copy ready.
- Tax Compliance: File HUF returns on time and follow all KYC guidelines.
- Fees & Charges: Compare annual maintenance charges (AMC) and transaction fees across brokers.
- Investment Strategy: Agree on clear goals with all coparceners before trading begins.
Conclusion
A HUF demat account unites members of a family to hold investments in one, tax‑efficient block. Simply by following this step‑by‑step guide—selecting a good broker, providing documents, and undergoing verification—you can open your HUF demat account without any hiccups and begin creating collective wealth.
Invest wisely and watch your family’s savings grow together!
