Understanding HUF: Key Legal Differences Between Members and Coparceners, and What Rights Daughters Hold

Many people think of HUF (Hindu Undivided Family) only as a tax-saving structure. However, it’s much more than that — it is a legal family entity recognized under Hindu law. Understanding who qualifies as a member, who is considered a coparcener, and what rights daughters hold can completely change the way you view this centuries-old legal framework.

How a Hindu Undivided Family (HUF) is Formed

The term “Hindu Undivided Family” itself indicates that only individuals who follow the Hindu religion can form it. But the term Hindu is interpreted broadly. It includes Jains, Sikhs, and Buddhists, while Muslims, Christians, Jews, and Parsis cannot create an HUF under Hindu law.

A HUF consists of descendants of a common ancestor extending up to four generations. Interestingly, an HUF is not something you “create” by choice. It comes into existence automatically by birth — it’s a creation of law, not of contract.

For example, when a child is born into a Hindu family, a new HUF is automatically formed, or the existing one expands to include the newborn as a coparcener.

Members vs. Coparceners: The Legal Difference

The most common confusion regarding HUF is understanding the difference between a member and a coparcener.

• A coparcener is someone who acquires a right in the ancestral property by birth.

• A member, on the other hand, becomes part of the HUF through marriage or adoption.

Before 2005, only male members could be coparceners under the Hindu Succession Act, 1956. However, the 2005 amendment changed that — daughters now have equal rights as sons. This means a daughter born into a Hindu family is a coparcener from birth and enjoys the same legal rights as her brothers in the family property.

Thus, today, an HUF can come into existence when a Hindu couple has a child. Even without children, if the couple inherits ancestral property, an HUF structure can still exist — but it becomes complete once a child is born.

All coparceners are members, but not all members are coparceners. Members such as a wife or widowed daughter-in-law have a right to maintenance from HUF income but not a direct claim to property partition. Only coparceners can demand division of property, although members are entitled to a share when partition actually takes place.

Role and Power of the Karta

Every HUF is managed by a Karta, who is typically the eldest male coparcener in the family. The Karta handles all financial, legal, and administrative matters of the HUF.

If the senior-most male chooses not to act as Karta, another coparcener can assume the role with the consent of the family. A minor cannot act as Karta under the Indian Contract Act, 1872, as they cannot legally enter into contracts.

In such cases, the widowed mother can act as a representative Karta on behalf of the minor until he becomes eligible.

Can a Daughter Become Karta?

Yes. In a landmark judgment in 2015 — Sujata Sharma vs. Manu Gupta — the Delhi High Court held that a daughter can also be the Karta of her father’s HUF, provided she is the senior-most coparcener.

However, she cannot be the Karta of her husband’s HUF, since she is not a coparcener there. After marriage, a daughter remains a coparcener in her father’s HUF but only a member in her husband’s.

Residential Status of HUF Under Tax Law

Under the Income Tax Act, the tax liability of an HUF depends on its residential status, which is determined by where its control and management are exercised.

If all key decisions and management of the HUF are handled from outside India, the HUF is treated as a non-resident. But if even a part of its control lies within India, it is considered resident.

For instance, even if the Karta lives abroad, but a manager or representative in India runs the HUF’s affairs as per his instructions, the HUF will still be regarded as resident in India.

Conclusion

The Hindu Undivided Family is not merely a tax tool — it’s a recognized legal and cultural institution that governs property, inheritance, and family structure under Hindu law. Understanding the difference between members and coparceners, knowing who can be Karta, and being aware of a daughter’s rightful place in the family’s legal framework is essential for every Hindu household.

In modern India, where gender equality and financial literacy are growing, the redefined role of daughters in HUFs marks a significant step toward balance and fairness in family wealth management.