Tax planning is no longer simply about making last-minute investments before the end of the financial year. For FY 2026–27, taxpayers should adopt a structured approach that considers their income, investments, deductions, capital gains, and the choice between the old and new tax regimes. According to CA Ruchika Bhagat, MD, Neeraj Bhagat & Co., with the new tax regime continuing as the default regime for eligible individual taxpayers, understanding the available options is essential for making informed financial decisions.
Bhagat suggests 10 practical tax-planning strategies every taxpayer should consider for FY 2026–27.
1. Compare the Old and New Tax Regimes
First, calculate your tax liability under both regimes. The new regime offers revised slabs, including a 30% rate above Rs 24 lakh, while eligible taxpayers can claim a rebate under Section 87A where applicable. However, the old regime may be more beneficial for taxpayers with substantial deductions and exemptions.
2. Plan Your Investments Early
Avoid making investments merely to save tax at the end of March. If the old regime is beneficial, plan eligible investments throughout the year. Depending on eligibility, options such as provident fund contributions, life insurance, tax-saving investments and other Section 80C benefits can form part of an overall tax strategy.
3. Make the Most of NPS Benefits
The National Pension System can provide an additional tax-planning opportunity. Employer contributions to NPS under Section 80CCD(2) can qualify for deduction, subject to applicable limits and conditions. This benefit can also be relevant to taxpayers choosing the new tax regime.
4. Review Your Health Insurance
Tax planning should complement financial protection. Taxpayers opting for the old regime may claim eligible deductions for health insurance premiums under Section 80D, subject to prescribed limits. Therefore, review your health insurance coverage and tax position together rather than purchasing a policy solely for tax savings.
5. Plan Your Home Loan Carefully
Homeowners should evaluate the tax implications of principal repayment and housing-loan interest separately. Under the old regime, eligible taxpayers may claim deductions for interest on a self-occupied property, subject to prescribed conditions and limits. The new regime has more restricted benefits for self-occupied property.
6. Manage Capital Gains Proactively
If you hold shares, mutual funds, property or other capital assets, review your unrealised gains and losses during the year. Timing a transaction, where commercially appropriate, can affect your tax liability. Tax-loss harvesting may also be considered where legally permissible, but investment decisions should never be driven solely by tax considerations.
7. Keep Track of All Sources of Income
Interest income, dividends, rental income, freelance earnings, capital gains and other income can affect your overall tax liability. Regularly reconcile your income with your bank statements, Form 26AS and Annual Information Statement (AIS) to identify discrepancies before filing your return.
8. Optimise Salary Components
Salaried employees should review their salary structure with their employer. While several exemptions are restricted under the new regime, eligible benefits and employer contributions can still have tax implications. The standard deduction is available under both regimes, subject to applicable provisions.
9. Plan Advance Tax and TDS
Tax planning is also about managing cash flow. Individuals with significant income from business, profession, investments or other non-salary sources should estimate their annual tax liability and ensure appropriate advance-tax payments. Salaried taxpayers should also verify whether their employer is deducting adequate TDS.
10. Maintain Proper Documentation
Finally, maintain evidence for investments, insurance premiums, donations, home-loan interest, rent and other relevant transactions. Proper documentation makes tax filing easier and helps substantiate claims if they are questioned later. The Income Tax Department has also enhanced information requirements in recent ITR forms, making accurate record-keeping increasingly important.
“Effective tax planning for FY 2026–27 should focus on tax efficiency, compliance and long-term financial planning, rather than simply reducing the tax payable. The right strategy will depend on an individual’s income level, investments, deductions, financial goals and tax regime,” she said.
Taxpayers should therefore compare both regimes, review their investments periodically, manage capital gains, monitor TDS and advance tax, and maintain complete documentation. A well-planned approach can help minimise unnecessary tax outgo while ensuring that financial decisions remain aligned with long-term goals.
Note: Tax provisions and limits are subject to applicable laws, notifications and amendments for FY 2026–27. Taxpayers should evaluate their individual circumstances before taking any tax-planning decision.
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