HUF tax benefits: Salaried individuals can form one, but only with own income

Gain gave a concrete example. Suppose a person earns a salary of ₹12 lakh in a financial year and also has a family property that generates rental income. If the rental income is taxed in the individual's hands, it could push a larger portion of income into higher tax slabs. If the rental income belongs to the HUF, it can be assessed separately, with its own tax slabs and deductions. The family gets the benefit of a separate taxpayer, potentially reducing the overall tax burden, the article said.

So when does an HUF become tax-efficient for a salaried person? The Mint article lists the eligible income sources: a family business, inherited property, rental income, investments, or eligible gifts. The HUF itself can claim deductions under various sections of the Income Tax Act, though the standard deduction and rebate benefit are not available to it.

Merely creating an HUF will not reduce tax outgo, Gain wrote. The HUF must have a genuine flow of its own income into its own bank account and must file its own ITR. For a salaried employee who already owns family property or inherited assets, forming an HUF can be a legitimate tax-planning tool. The family can split eligible income, double the benefit of exemptions under various sections, and deploy investments for collective gains. The key condition: the HUF must have its own income, not just the salary of its members.