Non-Resident Indians Eligible to Head Hindu Undivided Family (HUF) Estates: Tax and Management Considerations

Hindu Undivided Family (HUF) Management by Non-Resident Indians (NRIs)

Key Points:

• A non-resident Indian (NRI) can become the Karta of a Hindu Undivided Family (HUF) as long as they are a coparcener of the HUF.
• The Hindu Succession Act was amended in 2005 to allow daughters to become coparceners and have the same rights as sons.
• For income-tax purposes, an HUF is treated as a resident of India unless the whole control and management of its affairs is situated outside India.

Management of HUF Affairs

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• The Karta of an HUF can appoint a person as a manager to manage the affairs of the HUF in India.
• The residential status of the HUF is determined based on the location of its control and management.
• An HUF that is treated as non-resident for income-tax purposes is still liable to pay tax on its income that arises in India.

Tax Implications

• An HUF is treated as a resident of India for tax purposes unless its control and management is situated outside India.
• Even if an HUF is treated as non-resident, it is still liable to pay tax on income that arises in India.
• The probability of income arising in India from an HUF is low.