Wednesday, 11 September 2013

Halal Tax Saving in India: Minimize your tax with no Investments


In the previous posts I discussed the status of Tax Saving Investments.
There are ways to at least minimize some impact of taxes. Here are some of them.
Will write about individual ones in detail is sometime, insha-allah. Update: Added articles of couple of topics.

Initial seven options are ones that every single salaried person can make use of; remaining are case-specific:
  1. HRA (House Rent Agreement)
  2. Internet and Telephone Rental
    • Landline phone
    • Mobile phone
    • Broadband/ ADSL Internet
  3. Medical Allowance
  4. Insurance (maybe or may not be valid)
  5. Donations to registered NGO/ Madrasas'/ Relief Funds/ Charitable Trusts.
  6. Conveyance Expenses
  7. LTA (Leave Travel Allowance)
  8. Meal Coupons (and maybe some Gift Coupons)
  9. School Fees of children.
  10. Donation to political parties (I hope no one uses this one:))
  11. Medical treatment for self in case of catastrophic illness/ disability.
  12. Medical treatment for dependent handicapped/ disabled.

Pray for the taxes that you pay
    I really mean it. Even if you adopt all of the measures am suggesting below you would certainly pay a good amount of taxes. Not to mention the huge amount of indirect taxes that everyone has to pay and there is no escape. (Indirect taxes are taxes on goods and services. So whenever you buy something it has a big chunk of tax built into it. Like say a cellphone costing 10K could have 2-4K of tax in it. So this unknown tax is actually also huge in number.)

    OK back to the main point. Suppose you end up paying 50K tax in a year (not taking into account your indirect taxes). Now this is a good amount. Even your Zakat will be much less than this (unless you have inherited some good amount of wealth). 
    We all know how efficient and ethical our governments are. If they allot 100 crores to a project, on an average maybe 20 crores might be used for the exact purpose; rest being pocketed for the luxuries and black money of the politicians. 
    Now your hard-earned money should not go to feed such people's riches. So you should pray to Allah that the taxes paid by you end up in the good things like building school, hospitals, empowering the poor and disabled, salaries of workers, relief-work, scholarships etc.
    Well, that it the only thing that we can do for the taxes we pay. 
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    22 comments:

    1. Ahmed31 October 2013 at 06:36

      Salam. Firstly, JazakAllahu Khair for the articles, its reassuring to know there are halal ways to save tax. It would help a great deal if you could explain with more details, say, section #, limit, etc.

      ReplyDelete
    2. Fazeel Kazi2 November 2013 at 09:15

      Walykum assalam. Good suggestion. I actually assumed most people would be knowing about these things because someone or the other in the office might be doing this. Maybe I should explain each in more detail, inshallah.

      ReplyDelete
    3. Unknown1 March 2014 at 06:51

      Salaam Brother. I was looking for this for past couple of months.
      I am working as a freelancer from last 2 months and the predicted annual income of mine will be subjected to I believe around a lac.
      I know there are so many halaal and rewarding ways to spend money but they won't count in saving taxes.
      If you can give me some more advice for saving tax, it will be really helpful or I can follow this post itself.
      My email id is "riyazmpathan@gmail.com"

      Jazakallahu Khairan.

      ReplyDelete
    4. Unknown21 April 2016 at 09:50

      Plz explain me about the investing (or) saving money of monthly scheme without interesting.
      I have able to invest money for monthly like a post office RD scheme. But this RD is pure haram. so i m not able to save money in RD scheme. kindly tell me the ideas about delveloping my finicial by the way of islam (halal)

      ashifelectrical@gmail.com
      8287222885

      ReplyDelete
      Replies
      1. Fazeel Kazi23 April 2016 at 01:35

        Assalamualaikum,
        There are very few investment options for Muslims in India.
        I have listed some here: http://halal-investing.blogspot.in/2015/03/halal-investments-non-tax-saving.html
        Additionally Tata Ethical Mutual Fund is also an option.

        Delete
      2. Unknown18 July 2018 at 03:19

        Also there are another way i.e open a demat account and invest into shariabees shear. I did it recently. Opening an Demat account in various site are also available and they give quite some discount also.

        Delete
    5. Abdul Basith29 July 2016 at 14:25

      Please review the performance of this halal investment funds or instruments. I think they are under performing instruments. Very slow growth. Inflation is increasing fastes than this funds.

      ReplyDelete
      Replies
      1. Fazeel Kazi30 July 2016 at 00:30

        Of course it is. Infact forget halal 90% instruments and funds do not beat inflation.
        So am not sure what is your question

        Delete
      2. Anonymous19 August 2016 at 13:06

        Asslam alaikum
        I am doing business then, what should I do for saving tax or at least minimize it. Please guide

        Delete
      3. Fazeel Kazi21 August 2016 at 10:00

        Walaikum assalam,
        A businessman has more tax saving options than salary people.
        Based on your question, I'll try to reference things on a future blog, insha allah.
        For now you can read sites like these (it should be simple to know what halal/haram is based on my other articles):
        http://www.business-standard.com/article/pf/entrepreneurs-tax-saving-options-113081701145_1.html

        Delete
    6. Anonymous20 February 2017 at 08:50

      Assalam Alaikum

      Do you consider NPS as also haram if entire money is invested through Government Securities. Razak

      ReplyDelete
      Replies
      1. Fazeel Kazi21 February 2017 at 06:26

        Walaikum assalam.
        Of course NPS is not correct since all Government Securities are Interest bearing only.
        Morever unlike PF, NPS is not compulsory.

        Delete
    7. Anonymous20 February 2017 at 09:17

      Assalam-u-alaikum
      If insurance with maturity benefits is haram then how come term insurance is halal. What if the money returned is from interest earned by the financial institute who provides such insurance scheme. Razak

      ReplyDelete
      Replies
      1. Fazeel Kazi21 February 2017 at 06:35

        Walaikum assalam. First some clarification.
        Money is not returned in term insurance. You can only get money against a claim.
        As for halal or Haram part of it, I have already mentioned that it can be either.
        In following blog towards the end I have discussed the dilemma involved
        http://halal-investing.blogspot.in/2011/05/is-life-insurance-halal-in-india.html

        Delete
    8. Unknown13 March 2017 at 00:26

      Assalamualikum ,NPS is compulsory for the employees joined after 2006 in Karnataka.. and I wanted know as govt deduct 10 % of our salary monthly as NPS and they put same amount from govt side ,to NPS account.. and this total 20 % amount is invested in Haram sector.my question is during our retairment we are eligible to take this 20 % amount as halal..and ignore profit whatever comes...or else we are only eligible for 10 % amount which is deducted our my salary...jazakallahu khair

      ReplyDelete
      Replies
      1. Fazeel Kazi14 March 2017 at 20:15

        Walaikum assalam, It is 20% since it is contribution not profit (interest), 10% yours and 10% by company. Beyond this amount received is the interest earned.

        Delete
    9. UNKNOWN9 April 2017 at 04:02

      Masha Allah , very good way to describe ,

      Jazak ALLAH

      ReplyDelete
    10. Unknown13 April 2017 at 07:47

      Assalamualikum..how about investing in Heera group agencies,managed by nowhera Shaikh...which deals with gold,food,water and textile..though their are many fatwas that gold has to be dealed in presence of person..what about investing in remaining products like food,textile and water...jazakallah khair..

      ReplyDelete
    11. badshah50014 August 2017 at 23:13

      Can u suggest some shariah compliant mutual fund

      ReplyDelete
    12. Unknown5 February 2019 at 06:10

      I think about another option in tax savings.Let us invest 1.5 lakh in National Savings Certificate which can save an amount of Rd.30000 in tax ,considering 20% income tax. On maturity of the NSC , the interest received may be given back to government or may be used for some public purpose. Suggestions are invited.

      ReplyDelete
    13. Claudia Davis26 June 2019 at 06:59

      By and large, a tax guide gets ready desk work and rounds out taxes, however they additionally help set aside cash over the long haul.cartelle esattoriali

      ReplyDelete

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