[ad_1]
Zerodha co-founder and CEO Nithin Kamath has come up with a tip that can help you lower your total income tax outgo. (File photo)
You have to get a separate PAN and open a bank account in the name of the HUF to claim the income tax benefits
As the financial year is approaching an end it’s the time to go for all-last minute tax saving investments to reduce your income tax liability for the financial year 2023-24. Apart from the traditional tax-saving investments, there is another route to save more tax. Zerodha co-founder and CEO Nithin Kamath has come up with a tip that can help you lower your total income tax outgo.
Kamath in a tweet shared how married Hindus can increase their tax savings through 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 also suggested transferring rental income from property to HUF and opening a demat account in the name of the HUF, among others as a few ways to claim more tax benefits.
“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 with his tweet, Kamath also shared a detailed video link to help his followers, especially married Hindus, understand the use of HUF for planning and saving taxes.
As the Zerodha CEO shared the key details before the 31 March tax deadline, social media users also reacted to the same. Former IAS officer KBS Sidhu, while 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 basically a family consisting of lineal descendants, including wives and unmarried daughters from a common ancestor. As HUFs are treated as separate legal entities under the income tax law in India, they are offered a number of tax benefits, besides the tax deductions allowed to individual members.
While the head of the family, also known as ‘karta’, leads the HUF, other members are coparceners. A HUF can be formed with just two members, say the husband and wife; however, the wife is considered a member and not a coparcener. For tax purposes, one must have at least two coparceners.
An HUF can claim deductions under 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 bank account in the name of the HUF to claim the income tax benefits. Recognised as a separate entity under the Income Tax Act of 1961, a separate income tax return (ITR) should be filed in the name of the HUF.
It’s important to note that an HUF can only be set up by Hindu, Buddhist, Sikh and Jain families.
[ad_2]
Source link
