Zerodha's Nithin Kamath has a hack to save taxes: ‘If you are married and a Hindu'

Nithin Kamath highlighted the benefits of Hindu Undivided Family (HUF)- a tax-saving route. What is it?

Zerodha co-founder and CEO Nithin Kamath highlighted the benefits of Hindu Undivided Family (HUF)- a tax-saving route that offers benefits for married Hindus looking to optimize their savings.

Zerodha CEO Nithin Kamath talked about HUF and how it can help in saving taxes. (X/Nithin Kamath)

"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," he wrote on X (formerly Twitter).

He added, "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."

How users reacted to Nithin Kamath's post?

Several users reacted to Nithin Kamath's post as former IAS officer KBS Sidhu commented, “I have always suggested that any Hindu who marries should create an HUF on the very same day. 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.”

CEO of Dazeinfo, Amrit Misra, responded, "I have always suggested that any Hindu who marries should create an HUF on the very same day. 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."

What is HUF and how does it work?

HUF is recognized as a separate entity under the Income-tax Act, 1961. HUF holds its own Permanent Account Number (PAN) and files tax returns independently. It can be formed with just two members, one of whom must be a coparcener and for tax purposes, it must have at least two coparceners.