Hindu Undivided Family: As a lady can’t head HUF, demise of Karta may put family in trouble

A lady can become the President, Prime Minister, Chief Justice in India, but she can’t legally head her own family organisation – a Hindu Undivided Family (HUF)!

This harsh reality has been realised the hard way by a lady after the demise of her husband – who was the Karta of their HUF – leaving behind only a minor son.

In the absence of a clear provision of eligibility of a female becoming the Karta of an HUF and without having any precedence of it, the Income Tax Department refused to transfer the PAN of the HUF in the name of the widowed wife of the deceased Karta.

As a result, she was unable to find a way to redeem the investments made by her husband in Mutual Fund (MF) schemes through the HUF.

So, what can a female head of a family do in the absence of a major male member to manage the affairs of an HUF?

“According to HUF law, when a Karta of an HUF passes away, his eldest son automatically replaces him to become the Karta. But, in case Karta passes away and is survived only by his wife and his minor son, the wife can act as a guardian of the HUF until the son turns major. Courts have been divided on whether a widow can be a karta or a manager,” said Archit Gupta, Founder & CEO, Clear.

“A widowed wife can run the business, maintain the property, file taxes and also take decisions regarding the family under particular circumstances. However, she cannot borrow or sell assets of the HUF,” he added.

So, what will happen to MF investments till the son becomes a major?

“MF investments can be managed by her in the capacity of a guardian of the HUF. However, if she decides to dissolve the HUF, she can apply for transmission of units in Form T5 as a claimant/nominee,” said Gupta.

“Under the Income Tax Act, there is no requirement to obtain a new PAN. You may continue with the same PAN. However, Income Tax and bank authorities need to be intimated by submitting declarations of the death of Karta and given the son’s minor status and that she will act as the guardian of the HUF till the time the son attains majority,” he added.

However, with the PAN of the HUF in the name of the deceased Karta, things will not be easy for the widowed wife.

With the joint family system depleting and nuclear families becoming a norm, similar problems will surface more frequently.

So, the government and the competent authorities should consider changing the provisions of the HUF Act to bring parity for female members in HUF.