We have got some queries from our users with regard to creating of HUF  ‘Hindu Undivided Family’ for saving taxes. Some Taxpayers are under the impression, that they can even save taxes on their salary by creating HUF. In this write-up, we are trying to clear some doubts about creating HUF and saving taxes through it. As we all know, HUF and individual both are separate entity for taxation under the provisions of the Income Tax Act and with this the same person can be assessed in two different capacities i.e., as an individual and as Karta of his HUF. Same tax slabs are applicable to HUF for which an individual assessee is entitled and section 80C deduction in respect of LIC premium, PPF contribution, NSC, etc. up to Rs.1 lakh is also available to HUF. But, having said that, taxpayers cannot save taxes on the income, which they are earning directly, for example income from salary, Interest income on Fixed Deposits, rental income. The taxpayers should look to transfer under-lying assets to the HUF, in way of registered deed, stating the reason that the property has been transferred to the common pool of HUF. And, when this is done, then only the income, which is earned on that asset, will be taxed in the hands of the HUF and not the individual taxpayers. Also, if you have ancestral property and you are earning some income from the same then it is better to transfer this asset to HUF and save tax. You can transfer the amount received on sale of ancestral property /assets into your HUF and income from property of HUF can be further invested in instruments such as shares, mutual funds, etc. and will be assessed under HUF. Taxmantra.com provides complete online taxation solutions for individuals ( Tax Returns + Tax Support + Tax Planning ) – please see this – Services Offered. Taxmantra.com- Providing Complete Online Tax Solutions for Individuals, Not Just Returns.