Tax minimization in India is comprised of all the legal methods through which taxpayers (natural persons and legal entities) can reduce the level of taxes that must be paid with the local authorities. In India, this procedure is better known as tax planning, a method that should be used by all companies operating here. When starting a company in India, the investors will be entitled to reduce the level of taxes due through various legal methods.
Companies can also reduce their taxes through the double tax treaties signed in this country, but this is available only if the respective companies are tax residents in a country with which India signed this type of agreement. Our team of specialists in company formation in India can offer in-depth advice on the main tax minimization procedures available here.
Tax planning for investors in India
Foreign businessmen interested in how to form a company in India can obtain relevant tax reductions in specific conditions. The tax deductions to which the investor is entitled is named Rajiv Gandhi Equity Saving Scheme.
Through this, businessmen are encouraged to invest in India by purchasing shares in certain types of companies. At the same time, the tax scheme is applicable for the businessmen investing in investment vehicles registered as mutual funds. However, foreign or local businessmen can benefit from the stipulations of the scheme only for the first investment in the above mentioned financial tools. Our team of agents in company registration in India can further advise upon this matter.
Tax reductions through donations in India
Another option to reduce the level of taxation in India is available in the case of local taxpayers who make donations for the following:
• charity;
• social purposes;
• philanthropic purposes;
• contributions to the National Relief Fund.
The value of the deduction can range between 50%-100% of the respective donation. It is important to know that only donations in cash may be deducted, as specified by the Indian Income Tax Act.
There are other legal methods to reduce the level of taxation and investors can contact our team of consultants in company formation in India for consultancy services.