Home Loan Process for Hindu Undivided Family in India – Kotak Bank
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18 SEPTEMBER, 2019

The Family That Prays Together Stays Together.
In India, this saying gets an extended meaning due to the various benefits of staying in an undivided family. Along with security and happiness, staying in the undivided family brings many financial benefits as well. This is especially true in the case of Hindu Undivided Families (HUF). 

What is a Hindu Undivided Family?

A Hindu Undivided Family is a family that consists of all persons lineally descended from a common ancestor, including their wives and spinster daughters.
The common ancestor in a HUF is called as Karta or the head of the family, who is typically the eldest member of the family. The Karta is known to operate the day-to-day working in HUF. The children of Karta are called as coparceners.
While the process to get a home loan remains the same as other borrowers, the eligibility conditions for an HUF are different when compared to individuals applying for a home loan.

What is the home loan eligibility criteria for an HUF?

The home loan eligibility criterion for a Hindu Undivided Family are as follows,

  • The Karta of HUF must either be an applicant or co-applicant for a home loan.
  • The HUF should be in existence for at least three years
  • The HUF should provide their IT returns for the last three years
  • The net income of a HUF should be,

Minimum Rs. 2,40,000/- per annum (Chennai, Pune, Bengaluru, Mumbai, and Delhi)
Minimum Rs. 1,80,000/- per annum (Other Indian cities) 
The applicants need to submit appropriate proofs to complete the process of home loan documentation. Let's take a look at some of the tax benefits for an HUF.

What is the tax benefit of an HUF?

Forming an HUF is one of the most popular tax-saving exercises in India. An HUF is treated as a single tax-payer under Income Tax Act. The family business owned by a HUF is considered a separate tax entity from its members. It reduces the overall tax liability of the family.

The taxes work differently for an HUF than its individual members. Therefore, any deduction under Section 80 or exemption on tax according to laws can be claimed separately.

What you need to note is that in order to avail these benefits, you have to register your family as an HUF and have a legal deed. This deed should include all the details of every member of the family and their businesses. Lastly, PAN and a bank account should also be opened in the name of a Hindu Undivided Family.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.