Produced by: BT Desk
Zerodha co-founder and CEO Nithin Kamath highlighted the benefits of a lesser-known tax-saving route -- the Hindu Undivided Family (HUF). This offers substantial benefits for married Hindus looking to optimize their tax savings.
HUF is recognized as a separate entity under the Income-tax Act, 1961. It holds its own PAN and files tax returns independently.
By forming an HUF, income can be split among family members, leading to lower tax liabilities for each member. This is helpful for families with members in different tax brackets.
HUFs allow for the transfer of assets within the family without tax implications.
Once formed, HUFs offer ongoing tax planning opportunities. HUFs can adapt to changing tax laws to optimize savings over time.
The HUF should ideally be formed by individuals with a sizable family estate or income that can be legally separated among family members.
Entrepreneurs and business owners seeking to optimize tax liabilities and separate personal assets from business assets may find HUFs advantageous.