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Best Ways to Save Taxes in India Legally

BY: Dave Information | Category: Finance | Submitted: 2010-11-28 09:23:13
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Article Summary: "There are many methods in which a person can save taxes in India (not illegally). Read on to know more about these investments..."

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There are many methods that can be used to save tax in India. There are many people who try to save tax because this is like saving the money that would otherwise go to the government. Though you are not cheating the government by saving the money, you will be able to put it to better use. Some people think that trying to save tax is like cheating the government. On the other hand, saving tax is a smart method of saving your hard earned money. Some of the important methods in which you will be able to save tax are listed here. So get smart and save tax and save your hard earned money.

Agricultural investment:

If the individual is investing in agriculture, then the government gives a tax rebate on the amount that has been invested. The reason is that the government gives a high priority to the people who are agriculturalists. This will improve the food produced in the country and so a lot of importance is given to agriculture. So get smart and invest in agriculture.

Housing loans:

There is a great method of saving tax in India and that is to build a house for yourself. The government does not give tax rebates to the people who are involved in buying land for construction, but on the other hand, if you are building a house for staying, then you will get a rebate in the tax for the amount that you get as loan for the construction. This is a double benefit for you because you will not only be able to build a house for yourself, but you will also be able to avail the tax benefit with the loan that you get. This is mainly beneficial for the middle class people.

Invest in Government bonds:

There are various kinds of bonds that are having a tax saving nature. The public Provident fund and the Kisan Vikas Patra are some of the best methods that you can use to save taxes. There are many people who use these methods as avenues of investment, but these should ideally be used as methods in which you will be able to save tax.

Tax saving mutual funds:

Not all mutual funds are able to save tax for you. There are some kinds of mutual funds that will help you to be able to save tax. You should research for the best mutual fund in this category and then invest in it. This way, you will not only be able to get a huge return on the investment, but you will also be able to save tax on the investment and also on the returns that you get on the investment.

Long term capital gains:

Another method n which you will be able to benefit and save tax is to invest in equity markets for the long term. If you buy and sell the equity in the same year, then you will have to pay tax on the amount of money that you have gained in the process of selling the equity. If on the other hand, you have been able to hold on to your investment for a long term of more than one year, then you do not need to pay tax on the profit as it is considered to be long term capital gain.

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Comments on this article: (1 comments so far)

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I have spent money from my salary in last few years for agriculture. The land belongs my wife's grand parents. Can I get tax benefit ? Anonymous 2011-01-05 01:43:11 509

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