Financial Year 2026 is Here: Tax Planning Should be First on Your To-Do List

April marks the beginning of the financial year in India, making it the perfect time to plan your taxes for FY26 (April 1, 2025 – March 31, 2026). Tax planning involves legally reducing your tax liability by using deductions, exemptions, and investment tools offered under the Income Tax Act. We discuss a few pointers that will help you plan your finances and taxes well.

Choosing Between the Old and New Tax Regimes

India offers two tax regimes:

Old Regime

Allows you to claim deductions like:

• Section 80C (₹1.5 lakh for PPF, ELSS, LIC, etc.)
• Section 80D (health insurance premiums)
• HRA, LTA and other exemptions

New Regime

Offers lower tax rates with no deductions:

Compare your tax under both regimes before choosing.

Explore Top Tax-Saving Investments in Old Regime

There are several investments that are eligible for tax deductions and exemptions under various sections of the Income Tax Act. A few of them are:

• Section 80C (Limit: ₹1.5 lakh)

• PPF (Public Provident Fund) – 15-year lock-in period, with interest earned being completely tax-free.
• EPF (Employees’ Provident Fund) – A mandatory retirement savings scheme for salaried employees, where both employer and employee contribute.
• Life Insurance – Premiums paid for policies taken for self, spouse, or children are eligible for deduction.
• ELSS (Equity Linked Saving Scheme) – Tax-saving mutual funds with a 3-year lock-in period and the potential for market-linked returns.
• NSC (National Savings Certificate) – A fixed-income investment backed by the government, with a 5-year lock-in period and guaranteed returns.

• Health Insurance – Section 80D

Health insurance isn’t just about saving tax—it protects you from medical bills.

You can claim:

• ₹25,000 for premiums paid for self, spouse and children
• Additional ₹25,000 if you pay for parents below 60
• ₹50,000 if parents are above 60

That’s a total possible deduction of ₹1 lakh under this section!

• Home Loan Benefits

If you have taken a home loan, you get benefits under 2 sections:

• Section 80C: Up to ₹1.5 lakh on principal repayment
• Section 24(b): Up to ₹2 lakh on interest repayment

Read more: Tax saving options.

Claim Standard Deduction and Rebate

• Standard Deduction:₹50,000 in old and ₹50,000 for all salaried and pensioned individuals
• Section 87A Rebate: If income is ≤ ₹7 lakh under new regime, tax payable = ₹0

Important FY26 Tax Tips to Remember

1. Start Tax Planning Early in April 2025 to Avoid Rushed Investments in March 2026

Many people wait until the last moment in March to invest just to save tax. This often leads to poor choices. If you begin in April itself, you can space out your investments monthly and pick what suits you best.

Example: Instead of putting ₹1.5 lakh in a random insurance policy in March, you could invest ₹12,500 every month in an ELSS (Equity Linked Saving Scheme) starting April. This way, you avoid financial stress and also get time to study which fund performs better.

2. Choose Investments That Match Your Financial Goals

Don’t just invest to save tax—invest with a goal in mind. Your investment should help you achieve something in the future, like buying a house, funding your child’s education, or retiring comfortably.

Examples:

• If you’re saving for retirement, choose PPF or NPS.
• If you want higher returns and are okay with market risks, go for ELSS mutual funds.
• For short-term goals, Tax-saving Fixed Deposits or NSCs can be useful.

3. Learn from Last Year’s Mistakes

Look at what didn’t work well for you in the previous financial year. Did you invest in something just to save tax, but didn’t understand it? Did you miss any deductions?

Example: Last year, you might’ve bought a life insurance policy with high premiums but low returns, just to save tax. This year, you can switch to a term insurance plan (which offers higher coverage at a lower cost) and use the saved money in an ELSS fund or PPF.

4. Consider Professional Help If Unsure

If tax planning feels confusing, seek help from a Chartered Accountant (CA) or a certified financial planner. They can help you find better ways to save tax and plan your investments based on your income and goals.

Example: A CA might help a freelancer claim business-related expenses (like a laptop, rent, or internet bills) that reduce taxable income. Without expert help, many such legal benefits are often missed.

5. Always File Your ITR, Even If Tax Is Zero

Even if your income is below the taxable limit, filing your Income Tax Return (ITR) is still important. It acts as proof of income and is useful when applying for loans, visas, or even scholarships.

Example: Suppose you’re a student who made ₹2.5 lakh last year through freelancing. You won’t owe any tax, but filing your ITR can help when applying for an education loan or showing proof of income for passport verification.

Key Tax Deadlines for FY26

• 31 July 2025:File ITR (Income Tax Return) for FY26 without penalty
• 15 March 2026: Deadline for most tax-saving investments
• 31 March 2026: End of the financial year FY26

Conclusion

Tax planning is not just about saving taxes—it’s about making smarter financial decisions early. By starting in April, you gain control over your money, reduce your tax outgo, and invest with purpose. No matter your income level, smart planning in FY26 can go a long way in building wealth and peace of mind.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.