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Tax Planning & Savings — Updated for Tax Year 2026-27

Tax planning should begin with the correct tax period, tax regime, income profile and investment objective. From 1 April 2026, the Income-tax Act, 2025 applies to income for Tax Year 2026-27 and later tax years.

2026 transition

• FY 2025-26 income continues to be dealt with under the Income-tax Act, 1961 and is generally reported for AY 2026-27.
• Income earned from 1 April 2026 to 31 March 2027 falls in Tax Year 2026-27 under the Income-tax Act, 2025.
• The new framework uses the Tax Year concept and does not continue the old Assessment Year terminology for the new Act.

Specified savings deductions

The new Act retains the substance of the old Section 80C-style aggregate deduction through Section 123, with specified savings and payments placed in Schedule XV. The aggregate deduction remains ₹1.50 lakh for eligible individuals and HUFs, subject to the applicable conditions.

Examples of qualifying payments

• Eligible life-insurance premiums.
• Eligible provident-fund contributions.
• Specified equity investments where the statutory conditions are met.
• Eligible tuition fees.
• National Savings Certificate and other specified savings instruments.
• Eligible repayment of housing-loan principal.

Tax regime matters

The availability of deductions depends on the tax regime and the applicable provision. For AY 2026-27, the new tax regime is the default regime for eligible individual/HUF taxpayers, while eligible taxpayers may opt for the old regime subject to the applicable rules. Section 80C-type deductions are relevant to taxpayers who are eligible to claim them under the applicable regime; they should not be presented as automatic benefits under the default new regime.

Other planning areas

• NPS and other retirement-planning contributions where a deduction is available.
• Health-insurance and other eligible deductions where applicable.
• Home-loan interest and housing-related tax provisions where applicable.
• Capital-gains and investment holding-period planning.
• Business and professional income planning.
• Timing of income, investments and major transactions.

Our tax-planning review

1. Identify the correct Tax Year or Assessment Year and governing law.
2. Compare the applicable tax-regime options.
3. Review eligible deductions, exemptions, rebates and reliefs.
4. Review existing investments and planned transactions.
5. Check documentation and proof requirements.
6. Prepare a practical, lawful tax-planning roadmap.

Important

Tax-saving investments should not be selected only because they offer a deduction. Liquidity, risk, lock-in, return expectations, insurance needs and the applicable tax regime should also be considered. Tax rules, thresholds, forms and deadlines can change, so the position should be verified for the relevant Tax Year before implementation.

Planning your 2026-27 taxes? Let Investax India review your position and identify the relevant tax-planning and compliance opportunities.