ITR filing: As the financial year 2023-24 is about to end, earning individuals are busy finding out ways to save money meant for the income tax outgo. Some smart taxpayers would be busy planning their income tax for the next financial year as well. For a married taxpayer belonging to the Hindu community, Zerodha founder & CEO Nithin Kamath has suggested a hack while planning one's income tax return (ITR) for the next financial year. Zerodha's Nithin Kamath said that a married earning individual belonging to the Hindu community can use HUF (Hindu Undivided Family) tax benefits and save income tax as HUF is treated as a separate entity. He said that all deduction applies separately in HUF along with the individual deductions. Kamath shared this income tax return hack through a social media post using his 'X' account.
Sharing his income tax saving trick for a married Hindu taxpayer, Nithin Kamath wrote on his official X channel account, "A friend was asking me about taxation for Hindu Undivided Families (HUF). If you're married and a Hindu, you can use a 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. 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."
On how an earning individual would be able to use this HUF benefit available under the Income Tax Act 1961, Pankaj Mathpal, CEO & MD at Optima Money Managers said, "A salaried taxpayer expected to earn from one's ancestral property can open a HUF account and get those monetary benefits coming from the ancestral property into one's HUF account. In that case, its HUF would be used as a separate taxpayer entity. In that case, the HUF account would be eligible for the income tax exemption up to ₹7 lakh as it is available for an earning resident individual. If a salaried individual earns up to ₹7 lakh on its own and up to ₹7 lakh from one's ancestral property, then the HUF benefits would enable the earning individual to avail zero income tax outgo."
Pankaj Mathpal said that the HUF benefit is not restricted to the Hindu community only. This benefit is available to the Jain, Baudh, and Sikh community as well. He said that a cash deposit in an HUF account is also allowed but it follows the same cash deposit rules that apply to one's savings account.
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