An ancestral PAN is issued to a Hindu Undivided Family (HUF) that spans multiple generations and holds inherited assets. You need this PAN to identify your multi-generational family unit for tax purposes.
Understanding ancestral HUF
An ancestral HUF comes into existence through inheritance from ancestors and holds property or assets passed down over generations. This differs from a newly created HUF, which an individual forms with their spouse and children.
Key differences between ancestral and created HUFs
|
|
Ancestral HUF | Created HUF |
|---|---|---|
| Formation | Automatic via inheritance | Via deed with pooled assets |
| PAN date | “Ancestral” or 01/01/0001 | Specific deed date |
| Property source | Inherited (up to 3 generations) | Gifts, wills, contributions |
| Deed requirement | No new deed of declaration needed | Must have a deed of declaration on stamp paper |
| Documentation | Needs formalisation through PAN application for tax purposes | Must specify all members and the source of the corpus in the deed |
| Tax implications | Avoids clubbing provisions if property transfers directly through inheritance | Subject to clubbing provisions depending on the source of assets |