Can I have Demat & Trading Account in the name of HUF?
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- Updated On:24-Feb-2021
- Replies:1
Short Answer
Yes, a demat and trading account can be opened by the HUF Karta to trade in various stock market segments. The entire procedure is the same as the usual standard of opening a trading account. However, the PAN Card details, Bank account details would be that of the HUF account.
Detailed Answer
HUFs Karta's are entitled to open a Demat account and trading account. Not all the family members can do so, but only the HUF head. However, to ensure that you open a trading account through HUF, you will first open a bank account. Well HUF members can have different bank accounts, but then such a bank account is entailed only towards HUF related transactions.
HUF Bank Account
Once the HUF account/scheme is opened, a HUF PAN card is obtained, which is separate. Even the Aadhar cards and the various government documents are different. It's mandatory for the recipient that is entitled to a HUF plan to have a separate HUF bank account. In such an account, all things related to HUF should be maintained, and no savings of other family members should be carried out.
Documents required to open a HUF Account
- Proof of address of the Karta. It could be a passport or Aadhar card.
- Identification proof, which comprises of passport and Aadhar.
- PAN card of HUF.
- Declaration form of HUF comprising of every member stating the authority is directed only towards the Karta, member of the HUF account, the Karta's decision is final and approved by all the members of the family.
Once the HUF bank account is set up, its then time to open a trading and demat account; opening such an account entails excellent benefits to the members of such a scheme. All the features are listed as follows:
Features of HUF Demat Account
- Family investments.
- IPO enrollment increases as there is another additional account to apply for IPO shares.
- Buyback benefits are increased if and only if the HUF falls under the reserve retail quota.
- Tax benefits that are reaped in HUF accounts are considered as a separate entity. They can earn an additional tax-free income of 2.5 lakh rupees.
Documents required to open a HUF Demat Account
The Karta of the HUF will head all the trading and investment activities. For opening an account, all the documents must be signed by the Karta and submitted along with the following documents.
- Karta PAN card.
- Photograph of the Karta.
- HUF PAN card.
- PAN Card of the Karta.
- HUF address proof. For this, a bank statement is enough.
- Karta address proof. Karta can use their Aadhar card, pan card, passport, electricity bill, and other verification.
- Application stating the relationship with the Karta and the list of family members in the HUF account.
- Bank statement or passbook of the HUF account to showcase the HUF's existence.
With all of the above-given documents, forms, and applications, any stockbroker would provide you with the feasibility of opening a trading and demat account. It depends on your research skills to determine the ones that might benefit you the most in your trading affairs through the stockbroker.
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Discussion (0)
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