Zerodha co-founder and CEO Nithin Kamath has give you a tip that may provide help to decrease your complete earnings tax outgo. (File picture)
You have to get a separate PAN and open a checking account within the identify of the HUF to declare the earnings tax advantages
As the monetary yr is approaching an finish it’s the time to go for all-final minute tax saving investments to cut back your earnings tax legal responsibility for the monetary yr 2023-24. Apart from the normal tax-saving investments, there may be one other route to save extra tax. Zerodha co-founder and CEO Nithin Kamath has give you a tip that may provide help to decrease your complete earnings tax outgo.
Kamath in a tweet shared how married Hindus can improve their tax financial savings by the Hindu Undivided Family (HUF) route.
“If you’re married and a Hindu, you can use an HUF to plan and save your taxes. HUF is treated as a separate entity, so all these deductions will apply separately to HUF along with the individual deductions,” he wrote on X.
The Zerodha CEO additionally recommended transferring rental earnings from property to HUF and opening a demat account within the identify of the HUF, amongst others as a number of methods to declare extra tax advantages.
“So, transferring any property yielding rental income to the HUF, opening a Demat account in the HUF name, transferring money to the HUF bank account, accepting gifts, etc.” he added.
Along together with his tweet, Kamath additionally shared an in depth video hyperlink to assist his followers, particularly married Hindus, perceive the usage of HUF for planning and saving taxes.
As the Zerodha CEO shared the important thing particulars earlier than the 31 March tax deadline, social media customers additionally reacted to the identical. Former IAS officer KBS Sidhu, whereas recommending married {couples} to create an HUF, wrote, “It is a common misimpression that a person needs to be blessed with a son to be able to form an HUF. Moreover, people following the religions of Sikhism, Jainism, and Buddhism are also eligible for the benefit of HUF.”
DazeInfo CEO wrote, “Say goodbye to tax woes and hello to financial freedom with HUF! Married Hindus, take note: HUF isn’t just a tax-saving strategy, it’s a game-changer. By leveraging its benefits, you can take control of your finances and secure a brighter future.”
Hindu Undivided Family and Tax Benefits
A Hindu Undivided Family, or HUF, is mainly a household consisting of lineal descendants, together with wives and single daughters from a standard ancestor. As HUFs are handled as separate authorized entities below the earnings tax legislation in India, they’re provided plenty of tax advantages, moreover the tax deductions allowed to particular person members.
While the pinnacle of the household, also called ‘karta’, leads the HUF, different members are coparceners. A HUF could be fashioned with simply two members, say the husband and spouse; nevertheless, the spouse is taken into account a member and never a coparcener. For tax functions, one will need to have no less than two coparceners.
An HUF can declare deductions below Section 54, Section 54B, Section 54D, Section 54EC, Section 54F, Section 54G, and Section 47 of the Income Tax Act, 1961.
You have to get a separate PAN and open a checking account within the identify of the HUF to declare the earnings tax advantages. Recognised as a separate entity below the Income Tax Act of 1961, a separate earnings tax return (ITR) ought to be filed within the identify of the HUF.
It’s vital to notice that an HUF can solely be arrange by Hindu, Buddhist, Sikh and Jain households.
