Process to close huf bank account

This query is : Resolved

Milind (Querist)
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08 September 2017 Hello,

My father was the Karta of HUF. There are 2 bank accounts in the name of this HUF.
My father is expired so the new karta will be my mom or elder brother.

My Query
Can we close one of the HUF bank account( since its a very old account and is in old location-outstation and it will be difficult to operate it ) and transfer the balance into the other one. ?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 To close an HUF (Hindu Undivided Family) bank account and transfer its balance to another account, follow these steps:

### **1. Determine the New Karta**

- **Appointment of New Karta:** Since the current Karta (your father) has passed away, the family needs to appoint a new Karta. According to HUF norms, the new Karta is usually the eldest male member of the family, or it can be the spouse of the deceased Karta if there are no male members. In your case, it could be your elder brother or mother, depending on family consensus and legal requirements.

### **2. Gather Necessary Documents**

Before you approach the bank, ensure you have the following documents:

- **Death Certificate:** Proof of the previous Karta’s death.
- **Karta Appointment:** Written agreement or declaration appointing the new Karta. This may involve a family resolution or an agreement.
- **KYC Documents:** For the new Karta, including proof of identity, address, and PAN card.
- **HUF Deed:** A copy of the HUF deed (if applicable) and any changes to it.
- **Bank Documents:** Any documents the bank might require for closing or transferring accounts.

### **3. Notify the Bank**

- **Visit the Bank:** Visit the branch where the HUF account is held. You will need to meet with the bank manager or a representative.
- **Submit Documents:** Provide the required documents including the death certificate, proof of the new Karta, and the HUF deed.

### **4. Close the Outstation Account**

- **Application for Closure:** Fill out the account closure form provided by the bank. Some banks may also require a written request to close the account.
- **Transfer Funds:** Request the bank to transfer the balance to the remaining HUF account. Provide details of the receiving account.
- **Return of Bank Instruments:** Return any unused cheques and debit cards related to the old account.

### **5. Update the Bank Records**

- **Update Records:** Ensure that the bank updates their records to reflect the new Karta’s details and any other necessary changes.
- **Confirm Closure:** Obtain a written confirmation from the bank stating that the account has been closed and the funds have been transferred.

### **6. Transfer the Balance**

- **Follow Up:** Ensure that the balance has been successfully transferred to the remaining HUF account.
- **Monitor Account:** Keep an eye on both accounts to confirm that the closure process and transfer are completed without issues.

### **7. Notify Relevant Authorities**

If required, update the HUF's records with any relevant authorities (like the Income Tax Department) to reflect the changes in the Karta.

### **8. Additional Considerations**

- **Bank Policies:** Different banks might have different procedures and requirements for account closure and fund transfer. Check with the respective bank for specific requirements.
- **Legal and Tax Implications:** Consult with a tax advisor or legal expert to understand any potential legal or tax implications of closing an HUF account and transferring funds.

### **Summary**

1. **Appoint a New Karta:** Ensure the new Karta is appointed and documented.
2. **Gather Documents:** Collect all necessary documents including death certificate and KYC details of the new Karta.
3. **Visit Bank:** Submit a request for account closure and transfer of funds.
4. **Close Account:** Complete the account closure process and confirm that the balance has been transferred.
5. **Update Records:** Ensure all relevant records and authorities are updated with the new Karta's details.

Following these steps will help you manage the closure and transfer of HUF bank accounts smoothly.