With the advent of Demat Accounts, the world of trading and investing has seen a significant transformation. The demat account for share market plays a keen role in storing financial securities. How? As it replaces the physical share certificates with that of electronic records.
There are various Demant Accounts available, but the Hindu Undivided Family (HUF) Demat Account and Corporate Demat Account stand out due to their advanced characteristics and features.
In this blog, we will delve into four key distinctions that set HUF and Corporate Demat Account apart.
Differences Between HUF Demat Account and Corporate Demat Accounts
Here’s a detailed view of the critical distinctions between the HUF Demat Account and Corporate Demat Accounts:
1. Account Holder and Entity
A HUF Demat Account is mainly held by a Hindu Undivided Family, a unique legal entity recognized under Indian Law. It comprises multiple family members. However, it is treated as a single entity for taxation and financial purposes.
On the contrary, a Corporate Demat Account is mainly held by a registered firm or a corporate business. It can be a public, or a private company engaged in business activities.
In simple terms, these two entities’ legal identity and ownership structure distinctly influence the type of Demat Account they are eligible to open.
2. Purpose and Usage of the Account
HUF Demat Accounts are mainly opened for managing the investments and securities of the Hindu Undivided Family. This account can be managed for various family members, allowing for securities trading and efficient tracking.
On the contrary, Corporate Demat Accounts serve as a repository for the securities associated with a company’s activities. There are various activities related to this Demat Account, such as bonds, stocks issued by the company, and other financial instruments related to the business operations.
3. Documentation and Compliance
To open a HUF demat account for share market, the documents are required to establish the existence and identity of the Hindu Undivided Family, along with proof of the family member’s relationship.
On the contrary, to open a Corporate Demat Account, the process involves submitting the documents related to the company, like company bylaws, certificate of incorporation, legal paperwork, and more, as per the requirement.
4. Taxation and Liabilities
Taxation rules for HUF Demat Accounts conform to the standards of taxation principles applicable to Hindu Undivided Families. Furthermore, the income gains generated from this account are taxed per the HUF’s tax slab.
On the other hand, in the case of Corporate Demat Accounts, it is subject to corporate taxation laws and regulations. The gains and income generated by the company from securities are taxed according to the corporate tax rates.
If you wish to open any of these accounts based on your requirements, visit Dhan, one of the leading trading and investing platforms.
Conclusion
As we conclude this blog, you must have understood the essential distinctions between the HUF and Corporate Demat Account. While both of these accounts offer the convenience of electronic management, they cater to different entities with unique purposes and regulatory considerations. To open a demat account, visit Dhan today.
