Plan To Avoid Tax Payment
Not paying the tax is a punishable crime, but making use of the various loop holes in the income tax rules, to avoid paying the tax, is not a crime. For that, you need a thorough understanding of the income tax laws and its present amendments. The income tax law offers you many deductions, exemptions and concessions. If you are a cunning person, you can utilize these concessions and reduce the amount you have to pay as tax.
The following tips may help you to take wise steps. First, there is provision for tax exemption for interest earned on NRE/FCNR funds. But, this concession is not given to deposits in NRO accounts. Second, tax is not levied on interest and repayments of principal amount of home loans, which you have taken to purchase property in India. If you have to avail of this facility, you have to file income tax returns in India. Another thing about this deduction is that it is only upto a certain limit.
Third, trading in equities and share also helps to avoid tax payments, because gains earned on sale or transfer of equities is excluded from income tax. At the same time, profit from debentures or shares of Indian firms, or securities of Central Government purchased in foreign currency is taxable. The rate is 20% flat. Fourth, gains from UTI units are income tax exempted.
The Double Tax Avoidance Agreement that India has signed with some other countries keeps Indians from paying double tax for the same income if the income is taxed in one country. By using these provisions we are not cheating the government or doing anything illegitimate. We are only using these options to reduce our tax liability. Actually by planning beforehand you can increase the amount that comes into your hand. Moreover, there is no need for you to rack your brains thinking about reducing tax. There are experts to plan it for you.
