Can HUF Invest in Mutual Funds? Latest Eligibility and Investment Process 2026

A Hindu Undivided Family (HUF) can invest in mutual funds to build family wealth while potentially benefiting from separate taxation. To get started, it needs its own PAN, bank account, HUF declaration, and completed non-individual KYC. Once that’s done, the Karta can choose to invest in mutual funds through SIPs or lump-sums. 

Many investors consider HUFs as one of the tax-efficient way to build and manage family wealth. Since HUFs are taxed as a separate entity, it can help families manage their investments and claim additional tax benefits, subject to applicable rules. The same advantages can extend to mutual fund investments, as HUFs can invest in mutual funds.

But how can HUF invest in mutual funds, and what rules must it follow? This guide explains what is a Hindu Undivided Family (HUF), who can open an HUF account, and how HUFs can invest in mutual funds.

HUF is an abbreviation used for the Hindu Undivided Family. It is a family unit recognised under Hindu law and considered as a distinct and separate ‘person’ with regard to taxation. An HUF includes individuals who are descendants of a shared/common ancestor. 

Sons and daughters have the same rights as coparceners, while wives are members of the HUF. The HUF’s Karta (legal representative) is the person who manages the HUF and its affairs.

Here are three important points about an HUF:

• Who it covers: HUF provisions apply to Hindu, Buddhist, Jain, and Sikh families.
• Separate tax status: HUFs can have their own distinct PAN, hold assets, and file an income tax return separately.
• Family wealth: HUFs can own and manage eligible family assets under their own name.

Hindu Undivided Families can indeed make investments in mutual funds, provided it meets the applicable eligibility, documentation, and KYC requirements. HUFs are regarded as a separate investor for mutual fund transactions and can invest in eligible equity, debt, and hybrid schemes, as per the scheme’s terms.

Here is how an HUF mutual fund investment works:

• Investment ownership: Mutual fund units are held in the HUF's name, not in the Karta’s personal name.
• Account operation: The Karta submits investment, redemption, and other transaction requests on the HUF’s behalf.
• Payment: Investments are made through the HUF's registered bank account, in accordance with applicable payment rules.
• Taxation: Income and capital gains belonging to the HUF are generally assessed in its hands, subject to applicable income-tax provisions.
• Nomination: Mutual fund folios held in the name of the HUF cannot have nominees assigned.

The HUF must complete its own KYC requirements before investing. Also, the Karta's personal mutual fund account or KYC does not replace the HUF's entity-level requirements.

To understand who can open HUF accounts for mutual fund investment in India, you have to understand the eligibility requirements for HUFs:

• Separate HUF PAN: A unique PAN - that’s separate from the Karta’s own PAN or the PANs of other family members - is mandatory for HUFs.
• Dedicated HUF account in a bank: There has to be a HUF account in the bank (in the HUF’s name) to make investments and receive redemption proceeds.
• Karta Declaration Deed: The HUF must submit a declaration identifying the coparceners and its Karta, along with any other documents required by the AMC.
• KYC compliance: The HUF must complete a separate KYC registration under the entity’s PAN as per the AMC rules.

Many investors also wonder if they need to open a Demat HUF account. The truth is that an HUF can make mutual fund investments without a demat account. However, it may open a demat HUF account if it wishes to hold mutual fund units in dematerialised form or invest in ETFs.

Before making an investment in mutual funds, every HUF needs to complete the documentation and KYC requirements prescribed by the AMC, registrar, or investment platform. Usually, HUFs need these documents to complete the process:

The AMC may ask for additional information, including beneficial ownership details or supporting declarations.

Here is how to open a HUF account and start investing in mutual funds.

Step 1: Make the HUF documents

Firstly, you will need to prove the HUF status, and for that, you need an HUF deed. Create a formal legal declaration on a notarised stamp paper stating:

• The HUF’s formation
• Karta’s name
• Names of all coparceners (family members)

Step 2: Get a HUF PAN Card

Apply for a separate HUF PAN using Form 94 through the Protean (formerly NSDL) PAN portal or offline. You will need to submit:

• A notarised affidavit signed by the HUF’s Karta, stating every coparcener’s individual name, their father’s name, their Aadhaar number, address, and PAN details.
• Copies of the Karta’s identity, address, and date-of-birth proofs.

The affidavit must contain the coparceners’ details as they stand on the date of application.

Step 3: Open an HUF bank account

Next, you need to open a savings account with a bank that offers HUF accounts. To do so, you will generally need the HUF PAN and deed, along with the Karta's KYC papers. The account will be held in the HUF's name, and its Karta will operate it.

Step 4: Complete the HUF’s KYC

Complete the HUF’s KYC through a KRA or an authorised intermediary. Submit the HUF PAN, bank proof, Karta’s KYC papers, and other required declarations, including coparcener details, as applicable. 

Step 5: Open a HUF account

Register the HUF with an AMC or investment platform that supports non-individual investors. Submit the required HUF documents and verified bank details. In-Person Verification (IPV) may be needed, and you will have to sign the documents using the Karta’s Aadhaar e-Sign along with the official HUF seal.

Step 6: Start investing in mutual funds

Once the HUF’s KYC and account registration are complete, the Karta has to log into the portal. They can then select a mutual fund scheme and invest through a lump sum or SIP, where available. 

Here are a few things you should remember about who can open HUF accounts and how investing works through these accounts:

• The Karta’s personal PAN cannot be used for making investments in mutual funds on the HUF’s name.
• SIP/lump-sum investments must be made through a bank account held in the HUF’s name.
• No nominations can be made for HUF accounts because it is a non-individual investor account.
• In the event of the existing Karta’s death, the newly appointed Karta must submit the required documents to the AMC. Additional verification or paperwork may be needed depending on the circumstances.

In conclusion, HUFs are allowed to invest in MF schemes through SIPs or lump-sum investments, subject to the eligibility and documentation requirements of the scheme and AMC. The Karta operates the account, while the investments belong to the HUF.

But before getting started, it’s important to make sure the HUF has its unique PAN, registered bank account, and completed KYC.

1. Can an HUF account be used to invest in mutual funds?

Yes. HUFs are allowed to invest in eligible equity, debt, and hybrid mutual funds after completing its KYC (non-individual) with the required documents. The HUF’s Karta is responsible for managing investments. A separate HUF PAN and bank account are mandatory for such investments. 

2. What is a Hindu Undivided Family, and how can it invest in mutual funds?

A Hindu Undivided Family or HUF is a standalone taxable and legal entity as per Hindu law. It includes members of a family that share a common lineal ancestor. HUFs can hold assets and investments in their own name. 

To make investments in mutual fund schemes, the HUF needs a PAN, bank account, KYC registration, and the required family declarations.

3. Who can open HUF accounts, and what are the eligibility criteria?

As per HUF provisions, those meeting the following eligibility criteria can open HUF accounts:

• Members of Hindu, Sikh, Buddhist, and Jain families having a common lineal ancestor.
• Those with a legal HUF deed/declaration.
• Those with a separate HUF PAN and HUF savings account.
• Those with completed HUF KYC.

4. Can a husband and wife form a HUF for the purpose of mutual fund investment?

Yes. A married Hindu couple can constitute an HUF even without children. The husband may act as the Karta, while the wife is a member. However, to make MF investments under the HUF’s name, the family must have identifiable HUF funds or assets. Simply transferring personal money into an HUF does not automatically make the resulting investment income taxable in the HUF's hands.

5. What is the process for an HUF account to invest in mutual funds in 2026?

The Karta can follow these steps:

• Create the HUF declaration and required family documents.
• Obtain a unique HUF PAN.
• Open a HUF savings bank account.
• Complete the HUF’s non-individual KYC.
• Register with an AMC or investment platform and invest through SIP or lump sum.

An Investor Education and Awareness Initiative by Tata Mutual Fund. 

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Nomination is advisable for all folios opened by an individual, especially with sole holding, as it facilitates an easy transmission process. 

This communication is a part of the investor education and awareness initiative of Tata Mutual Fund.