BNKS & Associates

Top 5 Tax Planning Strategies for FY 2026

BNKS & Associates shares expert tax planning strategies to help individuals and businesses reduce their tax liability legally and efficiently for Financial Year 2026.

1. Maximise Section 80C Deductions (Up to ₹1.5 Lakh)

Section 80C remains one of the most powerful tax-saving tools available to Indian taxpayers under the old regime. Eligible investments include PPF, ELSS mutual funds, 5-year tax-saving FDs, NSC, life insurance premiums, and home loan principal repayment. Investing the full ₹1.5 lakh limit can reduce your taxable income significantly — especially relevant for those earning above ₹10 lakh annually.

2. Choose the Right Tax Regime

For FY 2026, the new tax regime is the default for all taxpayers, with income up to ₹12.75 lakh effectively tax-free for salaried individuals. However, if you have a home loan, active 80C investments, HRA, and NPS contributions totalling more than ₹3.75 lakh in deductions, the old regime may save you more at higher income brackets. Always run the numbers before your employer freezes your tax declaration.

3. Utilise HRA Exemption Efficiently

House Rent Allowance (HRA) can be partially or fully exempt under the old regime. The exempt amount is the least of: actual HRA received, 50% of salary (for metro cities) or 40% (for non-metro), and actual rent paid minus 10% of salary. If you are paying rent but your employer does not provide HRA, you can claim deduction under Section 80GG (subject to limits).

4. Claim Deductions on Home Loan Interest

Under Section 24(b) of the old regime, you can claim up to ₹2 lakh per year on interest paid on a home loan for a self-occupied property. For a let-out property, there is no upper limit — the entire interest paid is deductible against income from house property. Combined with the principal repayment under Section 80C, a home loan is one of the most tax-efficient instruments available.

5. Invest in NPS for Additional ₹50,000 Deduction

The National Pension System (NPS) offers an additional deduction of up to ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh limit of Section 80C. For someone in the 30% tax bracket, this translates to a direct tax saving of ₹15,000 annually. Additionally, if your employer contributes to NPS, that amount (up to 10% of salary) is tax-exempt under Section 80CCD(2) — with no upper cap under the new regime either.