31 March 2024 — Zerodha founder Nithin Kamath shares a tax-saving tip for married Hindu taxpayers through the Hindu Undivided Family (HUF), highlighting its benefits for reducing income tax burdens.
Key Points:
- Tax Planning Strategy: Kamath advises married Hindu taxpayers to leverage the separate entity status of HUF for tax planning purposes, allowing deductions to be applied separately to the HUF in addition to individual deductions.
- Utilizing HUF Benefits: He suggests transferring property generating rental income to the HUF, opening a Demat account in the HUF’s name, transferring funds to the HUF’s bank account, and accepting gifts under the HUF, among other strategies.
- Explanation and Resources: Kamath shares a social media post containing a video and blog explaining how to use HUF for tax planning and provides resources for further understanding and implementation.
- Expert Insights: Pankaj Mathpal, CEO & MD at Optima Money Managers, highlights the benefits of HUF under the Income Tax Act 1961, mentioning that HUF benefits extend beyond the Hindu community to Jain, Buddhist, and Sikh communities.
- Income Tax Exemption: Mathpal explains that by channeling income from ancestral property through HUF, taxpayers can avail of income tax exemptions, potentially reducing their tax outgo to zero if income falls within certain thresholds.
Conclusion:
Kamath’s tax-saving tip underscores the importance of utilizing legal avenues like HUF for tax planning, especially for married Hindu taxpayers. Understanding and implementing such strategies can help individuals and families reduce their income tax burdens effectively.
