The call usually comes a year or two after someone moves abroad. The family has an HUF — ancestral property, some FDs, perhaps a shop. The son who went to Singapore is a coparcener. Or, more complicated, the father who is the Karta has moved in with that son and now spends most of the year there.
The questions are always the same. Is he still a member? Can he still be Karta? Does the HUF become an NRI? And what happens to the bank account?
The short answer is that Hindu law and tax law ask different questions, and FEMA asks a third. Keep them separate and most of the confusion goes away.
# What doesn't change: membership under Hindu law
An HUF is a creature of Hindu personal law, which the Income-tax Act then taxes as a separate person. Membership comes from birth, adoption or marriage into the family. Coparcenary — the narrower group with a birthright in joint family property — comes from birth or adoption, and since the 2005 amendment to the Hindu Succession Act it includes daughters on the same footing as sons.
None of this depends on where you live. A coparcener who becomes a non-resident for income-tax purposes remains a coparcener. In general, his children born abroad acquire coparcenary rights by birth like any other. Moving abroad is not a partition, and it does not by itself sever anyone from the family.
Two caveats worth flagging:
- Change of citizenship does not, as such, change a person's position under Hindu personal law. But a foreign citizen's ability to hold certain Indian assets is restricted by FEMA, and that can matter a great deal on partition. Take advice before any property moves.
- Conversion to another religion raises separate questions under personal law. That is outside the scope of this article.
# Can an NRI be the Karta?
Yes. The Karta is normally the senior-most coparcener. The Delhi High Court in Sujata Sharma v. Manu Gupta held that this can be the eldest daughter, and a Division Bench upheld that view in December 2023. Residence does not enter into it.
The difficulties are practical, not legal:
- Signing and banking. The Karta operates the HUF's bank accounts and signs on its behalf. Banks apply their own KYC to an overseas Karta, and some ask for a resident member to operate under a power of attorney. Check with your bank before the Karta leaves, not after.
- Delegation has limits. A power of attorney can cover day-to-day operations. It is less clear that the Karta's own managerial role can be handed over wholesale, and it is exactly this delegation that tax authorities look at when deciding where the HUF is controlled.
- Tax residence of the HUF. This is the one that has real money attached. It gets its own section.
# What can change: the HUF's residential status
# Resident or non-resident — Section 6(9)
For an individual, residence is a matter of days. For an HUF, it is a matter of where it is controlled. Section 6(9) of the Income-tax Act, 2025 (old Section 6(2)) says an HUF is resident in India in any tax year unless the control and management of its affairs is situated wholly outside India during that year.
The word that decides most cases is wholly. If the Karta sits in Dubai but key decisions — letting the property, renewing the FDs, running the shop — are taken or implemented by a member in India, part of the control and management is in India and the HUF stays resident.
A genuinely non-resident HUF needs every material decision taken outside India for the whole year. That is rarer than people assume, and evidence decides it: where decisions were minuted, who instructed the bank, where the Karta was when he signed.
# Ordinarily resident or not — Section 6(13)
A resident HUF is further tested on whether it is not ordinarily resident (NOR). Under Section 6(13)(a) of the 2025 Act (old Section 6(6)(b)), a resident HUF is NOR in a tax year if its manager (the Karta):
- has been a non-resident in India in 9 out of the 10 tax years preceding that year; or
- has been in India for 729 days or less in total during the 7 tax years preceding that year.
So the HUF's NOR status is driven by the Karta's personal history, not by the family's or the HUF's own.
Why it matters: broadly, a resident-but-NOR taxpayer is not taxed in India on income that accrues outside India, unless it comes from a business controlled in India or a profession set up in India. An ordinarily resident HUF is taxed on worldwide income. For an HUF with only Indian FDs and Indian rent, the difference may be academic. For an HUF with foreign income, it is not.
Note what does not carry across. The individual-only rules — the 182-day test, the 120-day rule for visitors with Indian income above ₹15 lakh, the deemed-residence rule for citizens not taxed elsewhere — test individuals. For the HUF, the question is control and management, then the Karta's history.
You can test the Karta's individual status with our residential status calculator.
# What doesn't change for tax: the HUF's Indian income
Whatever its status, an HUF's Indian-source income stays taxable in India. Rent from the family house in Pune, interest on FDs with an Indian bank and profits of the shop are taxed in India whether the HUF is resident, NOR or non-resident. The HUF keeps its own PAN, files its own return and gets its own slab benefit.
What can change is withholding. If the HUF becomes non-resident, payers such as tenants and banks may have to deduct tax under the non-resident TDS provision (Section 393 of the 2025 Act, old Section 195), which usually means higher deduction and more paperwork. Get the status right before the payers do it for you.
# Money moving into the HUF from an NRI member
# The gift is not taxed in the HUF's hands
Under Section 92 (old 56(2)(x)), money or property received without consideration above ₹50,000 is taxed as income, unless it comes from a relative. For an HUF, "relative" means any member of that HUF. So a gift from an NRI coparcener to his own HUF is not income of the HUF.
# But the income on it may come back to him
Under Section 99(3) (old 64(2)), if a member converts his own property into HUF property — throws it into the common stock, or transfers it to the family otherwise than for adequate consideration — the income from that property is taxed as his income. For an NRI member, that income is Indian-source, so it lands in his Indian return. Our gift tax guide covers the gift side in more detail.
In practice this means an NRI son topping up the family HUF's corpus gets no tax benefit from it. The HUF is worth having for the assets it already holds.
# The FEMA side — take advice
Tax is only half of it. Moving money from an NRI's accounts into an HUF is a foreign exchange question as well:
- Which account the money leaves from (NRE or NRO) and whether the transfer is permitted as a gift to a resident entity needs checking against current FEMA rules and your bank's reading of them.
- Funds that go into the HUF are no longer the NRI's own money for repatriation purposes, so plan how, if ever, they would come back.
I would not move a large amount on the strength of a general article, including this one.
# The HUF's own investments and bank accounts
A few points are clear. Others are practical grey areas.
Clear: the Liberalised Remittance Scheme is for resident individuals only. RBI's framework states that it is not available to corporates, partnership firms, HUFs or trusts. An HUF cannot use LRS to invest abroad, NRI Karta or not.
Grey — check with your bank and adviser:
- Whether the HUF's existing resident savings account can continue to be operated by a Karta who is now an NRI, or needs a resident operator.
- What the HUF may invest in when its Karta is non-resident — some intermediaries apply their own restrictions to HUFs with overseas Kartas.
- How the HUF's own residence is viewed under FEMA, which uses its own definitions and is not the same test as Section 6 of the Income-tax Act.
Get these answers in writing from the bank and the platform before the Karta relocates. Changing them afterwards, from abroad, is slower.
# Partition when one coparcener lives abroad
Some families respond to a move abroad by partitioning. Three points:
- Only a total partition is recognised for tax. Under the 1961 Act (old Section 171), partial partitions after 31 December 1978 were not recognised. Check the corresponding provision of the 2025 Act for your case before relying on a partial arrangement.
- Distribution on partition is not a taxable transfer of capital assets in the HUF's hands (old Section 47(i); the Income-tax Act, 2025 carries a corresponding exclusion). The member's cost and holding period then matter when he eventually sells.
- FEMA governs what an NRI or foreign-citizen coparcener may receive. Some Indian assets, agricultural land in particular, carry acquisition restrictions for persons resident outside India. Whether a partition share counts as a permitted acquisition is a question for a FEMA specialist, not a tax one.
# What changes and what doesn't — one table
| Question | Does an NRI move change it? | Where it comes from |
|---|---|---|
| Is he still a member / coparcener? | No | Hindu law |
| Can he be Karta? | No — still possible | Hindu law |
| Is the HUF resident? | Only if control and management is wholly outside India | Section 6(9) (old 6(2)) |
| Is a resident HUF NOR? | Yes, possibly — depends on the Karta's history | Section 6(13) (old 6(6)(b)) |
| Is the HUF's Indian income taxable in India? | No change — always | Source rules |
| Is a gift from an NRI member taxed in the HUF? | No | Section 92 (old 56(2)(x)) |
| Is income on that gift clubbed with the member? | Yes, if it is his own property | Section 99(3) (old 64(2)) |
| Can the HUF use LRS? | No, with or without an NRI Karta | RBI LRS framework |
| Bank operation and investments | Possibly — check | Bank / FEMA |
Keep the HUF's paperwork ready before the Karta's passport gets stamped. VittSphere ONE's HUF full setup walks you through eligibility, deed, PAN, bank and compliance, and ARTHA answers the NRI-specific questions with the relevant section. Start free →
# References (verified 23 September 2026)
- Income Tax Department — Section 6, Income-tax Act, 2025 (residence in India)
- Income Tax Department — Section 99, Income-tax Act, 2025 (including sub-section (3), HUF conversion)
- Income Tax Department — Section 92, Income-tax Act, 2025 (gifts; definition of relative)
- Indian Kanoon — Manu Gupta v. Sujata Sharma, Delhi High Court (Division Bench), 4 December 2023
- Taxmann — Liberalised Remittance Scheme: guidelines and eligibility
Disclaimer: This article is educational and general in nature and is not tax, legal or FEMA advice. The example uses illustrative day counts, not any client's data. HUF membership and partition depend on Hindu personal law and your family's specific facts; FEMA treatment of HUFs with non-resident members or Kartas is fact-specific and can vary in bank practice. Several points above are flagged for specific advice — please take it from a qualified Chartered Accountant and, for FEMA and property questions, a specialist before acting. VittSphere ONE is not a SEBI-registered Investment Adviser. Data verified 23 September 2026.
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