How to Save Your Income Tax in India After the National Budget 2010

 A current survey in India reveals 67 percent of employees received salary hike in the year 2010. Which is beyond expectation. Indian finance ministry declared a new income tax scheme for government and non-government employees. Here is some popular tax saving option for Indian citizens - tax saving bond, funds. Eventually government of India allows various tax exemptions on those financial instruments.Here is a list of most popular tax saving mutual funds in India -

* HDFC Tax Saver

* Kotak Tax saver

* UTI Equity Tax Saver

* TATA Tax Saver

Pay your home loan in advance- it is better to pay your home loan EMI in advance, because the experts says - banks probably implies the new interest rate may rising up to 0.75 to 1 percent for medium term.In long-term it will make a large amount which you have to pay. So do not take too lightly your home loan EMI.

Systematic Investment Plan - a powerful tax saving tool - recent global meltdown do not affect Indian economy and now a day Indian economy is favorite for global financial leaders. So it is better time to invest in Systematic Investment Plan (SIP) or Equity Fund. SIP not only a powerful tax cutting tool on the other hand it is very effective on long-term wealth creation perpetual bonds in India.

As well as Reserve Bank of India Offers 6.5% Saving Bond, which is unique and most powerful Tax saving instrument. This bond has 5 years duration and rate of interest is 6.5% per annum. Reserve bank of India classifies this bond under 2 categories -

* 6.5% Saving bonds non-cumulative bond and

* 6.5% Saving bonds cumulative bond.

Unlike other tax saving instruments, the investor will get tax exemption under the income tax Act 1961.

Tax Saver from Private Sector Bank in India - ICICI, Axis, HDFC and IDBI also offers tax saving bonds to Indian citizens.

In generalized form, they classify their financial products under 2 categories -

* 8% cumulative bond and

* 8% non-cumulative bond.

The Indian postal system offers a wide range of tax saving options along with higher interest rates. Most popular financial instrument of Indian postal system is -

* Post Office Time Deposits

* Post Office Monthly Income Plan

* Post Office Recurring Deposits

* National Saving Scheme

* Public Provident Fund

* National Saving certificates.

Like Other Financial Instruments, Postal System financial instruments save tax under section 88 of the income tax act, 1961 .

Purchasing infrastructure bonds - infrastructure bond will help you to reduce your tax under section 80CCF. Side by side you can invest on Gold ETF units, it is easy to make cash and easy to hold.

Finally, it is always recommended - before making any long term investment, consult with any financial advisor for selecting the best option for you!