One of the ways to save on paying income tax in India is to invest in some of the tax saving products like,
- Personal provident fund
- Mutual Funds
- Housing loans
All these products are interest based. Most of my muslim friends, including me, have not invested till now, and paid tax in full.
One of my good friend asked me start a discussion on halal investments and savings in India. Some of the options I found are,
1. IDAFA :
They proclaim to be shariah compliant investment firm. I would be good if we take the opinion of a mufti regarding its services. It would also be better if they could get approval from a known Islamic institute or scholars.
Here’s what their website says,
Idafa Investments Pvt. Ltd. offers the following Services to help you invest – the Shariah Way.
Stock Broking: We offer Stock Broking services since 1994. Our dedicated team of dealers can diligently execute your trades on BSE and NSE. We screen all companies based on the Shariah guidelines. Mutual Funds: A mutual fund is a pool of investments by several thousand investors, which in turn invests in various listed and unlisted securities. We offer investment options in Tata Select Equity Fund, the only Shariah Compliant mutual fund in India, floated by the TATA MUTUAL FUND. Investment Advisory & Management: We can take care of an entire range of Investment related activities for you – from assisting you in selecting stocks to managing your portfolio of stocks for optimum wealth creation.
Only investment in their mutual funds offering would help us in saving tax.
Caution : I have heard different opinions about investing in mutual funds. Here’s one of them
After Islamic banking, it’s the turn of Islamic insurance. Even as the Reserve Bank of India is exploring Islamic banking opportunities for Indian banks, the Life Insurance Corporation of India has set the ball rolling on takaful (Islamic insurance).
LIC’s new international joint venture company – Indo-Saudi Insurance Company — will be the first to introduce takaful. This Arabic word means ‘guaranteeing each other’ or joint guarantee.
Has the product been launched ? Anyone bought it ? Did anyone check with scholars about its permissability ?
3. Insurance, infrastructure bonds, public provident fund :
I have heard two opinions about it,
- I heard from my brother in law that Mufti Sabeel of Vaniyambadi/Ambur told him that it is ok to invest in the above products if the intention is only to save tax and provided, ofcourse, we get rid of any interest that accrues on it and take back only the premium we have paid.
- I have also heard many scholars disallow it.
I would recommend that you consult a scholar whom you trust before taking any decision.
It would be good if MITA can take the initiative to consult eminent scholars in Bangalore and come up with answers to questions which most muslim IT professionals have on investments for the purpose of saving tax.