(Expert) 06 March 2008
You cannot form a HUF. It is not like a company or a firm. HUF is Hindu Undivided Family, wherein the business should be carried on by a joint family. As the name suggests, HUF is a family of Hindus. However, under the tax laws, even Jain and Sikh families can set up HUFs. Typically, HUF will consist of people who have lineally descended from a common ancestor, and include their wives and unmarried daughters. Do note: in Maharashtra, even married daughters are recognised as HUF members.
While the seniormost member is called the karta (manager), the male members are known as coparceners, and the females are referred to as members. In the ordinary sense, HUF should consist of at least two male members.
(Expert) 07 March 2008
Regarding the taxation point, HUF is treated as individual resident, so tax rates are far lower than those imposed upon a company. Currently, companies need to give tax @ around 44% which is much more than what is imposed upon HUF.