'If you're married and a Hindu...': Billionaire Nithin Kamath highlights a way to save taxes

Zerodha co-founder and CEO Nithin Kamath on Thursday pointed out the benefits of Hindu Undivided Family (HUF) -- a unique legal and tax entity specific to Hindu families in India which allows citizens to save on taxes. It requires a distinct Income Tax Return (ITR) and follows the same income tax slabs as individual taxpayers, with available deductions similar to those for individuals.

"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. "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."

The Zerodha boss also shared a video and a blog explaining how HUF can be used for planning and saving taxes.

The Hindu Undivided Family is treated as a "person" under section 2(31) of the Income-tax Act, 1961, for the purpose of assessment under the Act. HUF has its own Permanent Account Number (PAN) and files tax returns independent of members. Even though Jain and Sikh families are not governed by the Hindu law, they can also form HUFs.

Zerodha explained in its blog that when planned meticulously with a long-term perspective, HUF can emerge as a powerful tool for tax planning. Whether you possess ancestral property, multiple income streams, or seek an extra demat account for IPO investments, forming an HUF can be a worthwhile consideration.