Simple Tax Planning Guide

By
Hemant Beniwal
-
52
Simple Tax Planning Guide

Last Updated on April 26, 2026 by teamtfl

Every January, my inbox fills up with the same message: “Hemant, March is coming. What should I invest in to save tax?”

My first response is always a question back: “Which tax regime are you filing under – old or new?”

Half the time, the person does not know. They are asking about 80C investments without knowing whether 80C even applies to them anymore.

This is the 2026 update to year-end tax planning – written because the rules have changed significantly since this post was first published in 2011, and wrong information here can cost you real money.

⚠️ Important: This post was originally written in 2011

The old version showed tax slabs and limits from 2011-12 – Rs.1.9 lakh basic exemption, 80C limit of Rs.1 lakh, 80D at Rs.15,000. All of those figures are outdated and some instruments mentioned (80CCF infrastructure bonds) no longer exist. The current rules below are updated for FY2025-26.

Quick Answer

From FY2023-24, the new tax regime is the default for all taxpayers. Under the new regime, most deductions including 80C are not available. Year-end tax planning as most people know it – ELSS, PPF, insurance premiums – is relevant only if you have opted for the old regime. The first step in any tax planning conversation in 2026 is to establish which regime applies to you.

Step 1: Old regime or new regime – this determines everything

From FY2023-24, the new tax regime became the default. If you did not explicitly opt for the old regime with your employer or in your ITR, you are under the new regime.

New regime tax slabs for FY2025-26 (individuals below 60):

Income Slab Tax Rate
Up to Rs.4 lakh Nil
Rs.4 lakh to Rs.8 lakh 5%
Rs.8 lakh to Rs.12 lakh 10%
Rs.12 lakh to Rs.16 lakh 15%
Rs.16 lakh to Rs.20 lakh 20%
Rs.20 lakh to Rs.24 lakh 25%
Above Rs.24 lakh 30%

Under the new regime: standard deduction of Rs.75,000 is available for salaried employees. No 80C, no 80D, no HRA exemption, no home loan interest deduction. Only NPS employer contribution under 80CCD(2) remains available.

Old regime: Basic exemption Rs.2.5 lakh (Rs.3 lakh for 60+, Rs.5 lakh for 80+). Tax rates 5%, 20%, 30% at respective slabs. All deductions – 80C, 80D, HRA, home loan interest – available. Standard deduction Rs.50,000.

Which regime saves you more tax depends on your total deductions. If your combined deductions (80C + 80D + HRA + home loan) exceed roughly Rs.3.75 lakh, the old regime may still save more tax. If below that, the new regime is better for most. Calculate both before deciding – do not assume.

If you are on the old regime: what still works in 2026

Section 80C – Rs.1.5 lakh limit (unchanged since 2014)

The 80C limit has not changed since 2014 despite inflation. At Rs.1.5 lakh, it covers contributions to EPF, PPF, ELSS, life insurance premiums, children’s tuition fees, home loan principal, NSC, and Sukanya Samriddhi.

Most salaried employees already exhaust 80C through EPF alone. Check your Form 16 before rushing to invest more. If EPF contribution is Rs.1.2 lakh annually, you only need Rs.30,000 more from ELSS or PPF to reach the limit.

Best 80C instruments for FY2025-26:

  • ELSS (Equity Linked Savings Scheme): 3-year lock-in, market-linked returns, only equity option in 80C. Best for investors with 5-plus year horizon. SIP preferred over lump sum in March.
  • PPF: 15-year lock-in, currently 7.1% interest (tax-free), government-backed. Best for conservative savers who want guaranteed, tax-free returns.
  • NPS (Tier 1): Additional Rs.50,000 deduction under 80CCD(1B) over and above the 80C limit. Lock-in till 60. Good if you are already maxing 80C elsewhere.

Section 80D – health insurance premiums

Deduction for health insurance premiums paid for self, spouse, and children: Rs.25,000 per year (Rs.50,000 if you are 60 or above). Additional Rs.25,000 for parents’ health insurance (Rs.50,000 if parents are 60+).

Maximum combined deduction: Rs.1 lakh (self + senior citizen parents, both at Rs.50,000 each). This is genuinely one of the most underused deductions – and unlike ELSS, it is spending you should be doing anyway.

Home loan interest – Section 24(b)

Deduction up to Rs.2 lakh per year on interest paid on home loan for a self-occupied property. For let-out property, the full interest is deductible but set-off against other income is restricted to Rs.2 lakh; the balance is carried forward.

NPS employer contribution – Section 80CCD(2)

This deduction is available under both old AND new regime. If your employer contributes to NPS on your behalf, up to 14% of basic salary (central government employees) or 10% (other employees) is deductible. This is the one meaningful tax benefit that survives into the new regime.

What no longer exists – instruments to stop looking for

Section 80CCF infrastructure bonds: These were available briefly from 2010 to 2012 with an additional Rs.20,000 deduction. They were discontinued. If anyone is recommending 80CCF investments in 2026, they are working from an outdated playbook.

Rajiv Gandhi Equity Savings Scheme (RGESS): Discontinued from FY2017-18. No longer available.

Tax-free bonds with new issuances: NHAI, PFC, REC tax-free bonds are no longer being issued in primary market. Existing ones trade on secondary market. No new tax-free bond investments are available from the government at this time.

The right sequence for year-end tax planning

Most people approach this backwards – they pick instruments first and then check if they save tax. The right sequence:

1. Confirm your regime first. Old or new? Check your April salary slip or ask HR.

2. Check what is already invested. EPF, insurance premiums already paid, PPF contributions made. Do not invest again to fill 80C if it is already full.

3. Calculate your actual tax gap. How much additional deduction do you need to move to a lower slab or reduce tax meaningfully? Investing Rs.50,000 in ELSS when you are already in the 30% slab saves you Rs.15,000 in tax – useful, but know the actual number before deciding the instrument.

4. Choose instruments based on need, not tax alone. ELSS is tax-saving AND long-term wealth creation – excellent choice for the equity portion. PPF is tax-saving AND a safe, long-term debt instrument – excellent if you need fixed income. Buying a life insurance policy purely for 80C is the worst tax-saving strategy possible – you get poor insurance and poor investment returns simultaneously.

5. Do not wait until March. An ELSS SIP started in April spreads the investment across 12 months and benefits from rupee cost averaging. A lump-sum ELSS in March may happen to buy at a market peak.

Also read: ELSS: The Only Tax-Saving Instrument Worth Choosing for Equity

Tax planning is one part of financial planning – not the whole thing

The best tax-saving decision is rarely made in March under deadline pressure. It is made as part of a full-year financial plan where investments are chosen for their fit with your goals first, and tax efficiency is built in from the start. We help clients structure this at RetireWise.

Book a Clarity Call

Frequently asked questions

Is Section 80C available under the new tax regime in FY2025-26?

No. Section 80C deductions are not available under the new tax regime. If you are filing under the new regime (which is now the default), investments in ELSS, PPF, life insurance premiums, and other 80C instruments do not reduce your taxable income. The only deductions available under the new regime are the standard deduction of Rs.75,000 for salaried employees and the employer’s NPS contribution under Section 80CCD(2).

Which tax regime is better – old or new in FY2025-26?

It depends on your total deductions. The new regime offers lower slab rates but no deductions. The old regime has higher rates but allows 80C, 80D, HRA, home loan interest, and other deductions. As a rough guide: if your total deductions exceed Rs.3.75 lakh, the old regime may save more tax. If below that, the new regime is likely better. Always calculate both before deciding – the break-even point varies based on income level and deduction composition.

What is the best tax-saving investment in India in 2026?

For investors on the old regime, ELSS (Equity Linked Savings Scheme) is the best 80C option if you have a 5-plus year horizon – it has the shortest lock-in (3 years) among 80C instruments and market-linked returns that have historically beaten PPF over 10-plus year periods. PPF is best for the risk-averse – guaranteed, tax-free returns currently at 7.1%. NPS adds an extra Rs.50,000 deduction under 80CCD(1B). Never buy insurance purely for tax saving – separate your insurance and investment decisions.

What is the Section 80D deduction limit for FY2025-26?

Rs.25,000 for health insurance premiums for self, spouse, and children (Rs.50,000 if you are 60 or above). An additional Rs.25,000 for parents’ health insurance (Rs.50,000 if parents are senior citizens). Maximum combined deduction of Rs.1 lakh is possible if both you and your parents are 60-plus. This deduction is available only under the old tax regime.

Are you on the old or new tax regime this year – and did you consciously choose, or did it just default? Share in the comments.

52 COMMENTS

  1. will gold investment will be part of tax savings? if yes can u please let me know the clause no n what is the limit n how much we can save?

    • Hi Sudarshan,
      There is no long term gain tax (if you sell after 1 year) but if you sell it before that, you have to pay 15% on the total gains.

  3. Just to know about one of my colleague had comment with you about 1) PF that his name in the PF slip found without initial.
    2) Also, about interest in investment some of amt from the salary to PF apart from regular flow by the employer and employee.

    Will there be any problem regarding point 1) and about point 2), the procedure to follow. Will you please advice.

  4. HI, hemant sir
    i want to know about capital gain tax
    my father(71 yrs) is investor he buy and sell property
    BUYING:5-6 properties in 1998-1999
    SELLING:
    2006 FLAT 350000
    2008 2 shops 550000(both)
    2009 1 shop 200000
    2010 1shop 150000
    2011 1 shop 400000
    we invest all of this money in bank FDs when we sell prop & close the FD
    (on or before or after maturity)
    i mean we invest 3.5L FD in 2006 withdraw in 2007 and so on
    my father had not paid tax since 20 yrs approx
    so now i m worry about its verification and I-T rules etc
    what should i do?please advice

  6. Dear Hemant,
    I had posted a query earlier on 22 Mar however I am still waiting for your advice. Please advice as to whether my father who has turned 80 yrs in Oct 2011 is eligible for IT exemption up to Rs 5 lacs in the FY 2011-12.
    Regards,
    Inderjit Metharu

  7. dear hemant,
    please advice me should i continue paying premium for ‘max amsure secure returns builder ulip-increasing simplified’ which i purchased in dec-97 fund value is just 50% of what i paid till date. this product was sold to me by amway agent misleading and hiding real facts. please let me know where i can complaint for the same.

  9. please inform loan taken on mortgage of one residential property other than taken for the purpose of construction ,but for house improvement qualifies for interst deduction in IT

    • Hi
      Yes improvement loan qualifies for deduction but it should come in name of home loan – talk to your housing finance company.

  10. Hi Hemant,

    My wife is salaried person (4,32,000 /PA) .
    Pf amount is 9360 /pa

    Investment
    LIC = 10,000
    Franklin India Taxshield = 40,000
    Fidelity Tax Advantage = 30,000

    I want to invest 20,000 more to save the tax , please suggest the option for the same.
    Shall i go for health insurance (what is the diff between Health Insurance & mediclaim). If yes then which (2 Adult + 1 child) or any other option.

    Thanks,
    Bhushan

    • Hi Bhushan
      Health insurance will give tax benefit over & above Rs 1 Lakh (80 C). In 80 C you can think of opening PPF account.

  11. Hi

    My father gave voluntary retirement and his annual income from the emplyer(railwys) is 1.20 lakhs. his other income such as FD nterest makes him to come under the 10 percent slab. he is taking more medicines and had one catract surgery everything cost around 40000 per year for this yr(2011-2012).

    1. how will he get the form 16?

    2. is there any provision while filing returns to claim these medical bills?

    Pls guide me.

    • Hi Vignesh,
      I think regarding form 16 – your father should reach their accounts department.
      Upto Rs 15000 medical bills can be used to save tax but this is actually part of overall salary so again accounts department can help you in this.

  13. INDIAN PSU INSURER WHICH ARE LAUNCHING INSURANCE PLANS FOR CHILDENS/TAX SAVING SHOULD STOP SUCH MALPRACTICING OF FOLOING GULLIBLE INVESTORS.IRDA MUST STOP SUCH THING.

    • Hi Madhav,

      No there is no exemption of gold purchased with bill.And there is no exemption for gold purchased without bill as well.

  16. Hi,

    Very good article in a nutshell.
    Request your comments on my selection of ELSS funds for tax savings under 80C.
    I would like to invest around 30000 at onetime now.
    Please suggest me some good funds. I have Fidelity Tax Advantage as one of the fund in my mind

    Regards,
    Nagasudhan
    .

  18. Hi Hemant,
    I have another Q, I was surfing through the internet and came across Time Deposit of Post office, the time duration for the deposit are 1yr, 2yr, 3yr, 4yr and 5yr. but I am not sure weather we can claim tax benefit for 1,2,3 and 4 yrs under 80c.
    Any idea?

  19. Hi leader,

    I am 38 yrs salaried person, having regular premium of rs 30thousand , home loan of rs 72 thousand per annum. would like to do SIP of Rs. 50000 per annum.
    please suggest the plans to get maximum at the age of retirement.

    • Hi Latha,

      Mortgage interest on a loan taken out for investment, rental, secondary or any properties other than your main residence does not qualify for interest relief.

      Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief.

  21. Hi Hemant,

    What an impressive blog you have managed….& quite a following, I must say.
    Request your comments on my selection of Mutual Funds for SIP investment, starting Dec 2011 onwards. Please suggest if the funds I have shortlisted for SIP are good enough or not recommended…

    I am 29 years old. Plan to invest INR 12K each, in all these funds…

    HDFC TOP 200 FUND- GROWTH Large Cap
    Fidelity Equity Fund (G) Large Cap
    IDFC Premier Equity – A (G) Midcap & Small cap
    SBI Magnum Emerging Busi (G) Midcap & Small cap
    ICICI Discovery Fund Midcap & Small cap
    HDFC EQUITY FUND- GROWTH Multicap
    Canara Robeco Infrastructure Fund Infrastructure Fund
    ICICI PRUDENTIAL TECHNOLOGY FUND- GROWTH Technology Fund
    RELIANCE PHARMA FUND- GROWTH Pharmaceuticals
    Reliance Gold ETF Gold
    AIG World Gold Fund (G) Gold

    • Hi

      1.Please reduce the no. of funds.
      2.Eventhough u are young Avoid sectoral funds which are highly risky. Have one or maximum two sectors which u can really take a bet in the next 3 yrs. Avoid infra, Pharma and technology funds.
      3.Amount u has not specified . so i cant see ur core and satellite percentage.
      core- large cap, large and mid cap. satellite- remaining all funds. keep it according to your risk profile. core generates constant returns. satellite will be suddenly high /low.
      4.Mid cap and Multi cap are next to sector funds in risk. But they can be part of your protfolio. reduce it to three. As more funds u cant review it.

      5. AIG gold fund is the one which tracks on the gold mining companies. so it s better to avoid that. its not like Reliance gold fund which will be tracking its own etf. Generally As these are funds of funds expense ratio is higher. Taxation of gold fund is also diff. so better to go for etf if you are a long term investor.

      6. large cap selection is good.

      My suggestion : 1. keep the large cap 2. Make it two three.
      IDFC Premier Equity – A (G) Midcap & Small cap
      SBI Magnum Emerging Busi (G) Midcap & Small cap
      3. I dont suggest you sectoral funds. sorry
      4. Quantum gold fund(if you are really interested in gold, go for this.) Expense ratio is lesser.

      regards
      Vignesh

      • Thanks a ton, Hemant for devoting your attention & analysis to my query….I would do exactly as you said. Would be back here, with a revised & trimmed Mutual funds portfolio, shortly.

        • Thanks a ton, Vignesh for your analysis & recommendation.
          As per your recommendation, please find my final list of mutual funds to be invested in, through SIP route. I have reduced no. of funds from 11 to 9. Amount would be INR 12000 per annum in each fund.
          Please suggest.
          My profile : I am 29, married & 1 kid.

          HDFC TOP 200 FUND- GROWTH Large Cap
          Fidelity Equity Fund (G) Large Cap
          FRANKLIN INDIA BLUECHIP FUND- GROWTH Large Cap
          DSP-BR Top 100 Equity – RP (G) Large Cap
          ICICI Pru Discovery -Inst -I Large & MidCap
          IDFC Premier Equity – A (G) Midcap & Small cap
          SBI Magnum Emerging Busi (G) Midcap & Small cap
          HDFC EQUITY FUND- GROWTH Multicap
          Reliance Gold Fund Gold

          Thanks & Regards,
          Rahul S.

          • 1. Intially i thought u are goi to invest 12000 in each fund per month. now only i came to know that u are goi to invest 12000 per annum.

            Sorry My suggestion u took it in a wrong way. I asked you to reduce the mid and small cap funds from four to two. that i did not mention in the comment section. U interepted to increase ur large cap portfolio.

            2. Your previous selection of large cap is good.

            My suggestion

            HDfc top 200 – 3000
            FRANKLIN INDIA BLUECHIP FUND- GROWTH Large Cap-4000
            IDFC Premier Equity – A (G) Midcap & Small cap ——–2000
            SBI Magnum Emerging Busi (G) Midcap & Small cap—- 1000
            Hdfc equity – 1000
            One gold fund — 1000 (Do you have any specific reason for goi for the reliance gold ? Take the one which has the least expense ratio that willbe benificial for you in long term)

            core portfolio- 60 percent satellite- 40 percent.

            1. know abt these things before investing in gold mutual funds

            (i) taxation while redemption
            (ii) Double charges as they are funds of funds

            Later on while increasing ur sip u can increase the no of funds and that too not more than max 6 or 7.

            if you have still any doubts revert back.

            @Hemant pls guide us by providing the feedback on above the selection is good or need any changes.

            regards
            Vignesh

  22. what’s the best alternative of ELSS for next year when the proposed DTC kicks in? right now I’m utilizing 100% 80c through ELSS but confused if there’s any such scheme will remain available post DTC except crappy ULIPS etc. any thought? I don’t want to dive into debt except mandatory EPF deductions through my employer.

    Jagbir

  23. Hi,
    When is a good time to file taxes? As close to the deadline as possible, or months in advance? What do you suggest?
    Right now I have no home loan, but plan on taking one by December or January. Should I file after?

    Thanks.

    • Hi Veer,

      You should file your return in time for salaried it’s 31st July of Assessment year & for business man & others its 30th September. It’s good that you should file return in advance.
      Yes, when you are filing the income tax in next year of current year you can easily claim tax exemption under head House Property.

  24. Clear, Simple and Understandable Article. Thanks Hemantji. Apart from 80C, 80CCF, 80E and 80D sections, the rest are so painful to claim, especially producing the documents for disability etc.
    So, any ideas what happens to the tax payers money with the Govt? Isn’t Govt accountable?
    Also, just want to add that filing can be done online at the IT website or through third party like Taxsmile etc but they charge a fee for that. Refunds are suppose to come back to our bank accounts, just received an email last week from IT Dept that the refund is being processed, eager to see how different it is from my previous refunds, applied online for the first time.

    • Dear Mansoor,
      Hope you will get your refund soon.
      Couple of years back getting refund was herculean task & people were giving cuts to CAs to get that amount.

    • Hi Jayesh,
      I believe 80D benefit is only available for self, spouce, children or your parents. Check this with your CA – if you are claiming this benefit.

    • Dear Kannan,
      Read this
      Section 80DD for Medical Treatment of Handicapped Dependents
      If you are incurring expenditure for the treatment of your handicapped dependent, you could claim a deduction under section 80DD.
      Available Deduction – Rs 50000, or actual expenditure incurred, whichever is lesser. For severe handicap conditions Rs. 1,00,000 is the deduction limit.
      Scope of Deduction – Deduction can be claimed for dependent parents, spouse, children and siblings. Dependents must not have claimed any deduction for their disability.
      Deductions are permissible in either of the following cases.
      a) Costs incurred for medical treatment, training or rehabilitation of a disabled dependent, including amount spent for nursing.
      b) Amount paid towards an insurance scheme for the maintenance of your disabled dependent in case of your untimely death.
      Meaning of Disability- Disability means a person suffering from 40% or more of any of the below disabilities. A severe disability condition is 80% or more of the disabilities.
      a) Blindness and Vision problems
      b) Leprosy-cured
      c) Hearing impairment
      d) Locomotor disability
      e) Mental retardation or illness
      Key factors
      a) Individuals would need to produce a copy of the disability certificate as issued by the central or state government medical board to claim deduction.
      b) Insurance policy obtained must be in your name and should be a policy for life. It could pay either an annuity or a lump sum amount for the benefit of the dependent on your death.
      c) If the disabled dependent predeceases you, the policy amount is returned to you, and treated as income for the year in which you receive it, thus fully taxable in your hands.
      Section 80 DDB for Treatment of Specified diseases
      Costs incurred for treatment of specified illnesses, could fetch you a tax benefit under section 80DDB.
      Available Deduction – For individual assesses less than 65 years of age, a deduction limit of Rs. 40,000 is applicable. For a senior citizen, the limit is Rs. 60,000.
      Scope of Deduction – Deduction is applicable for treatment of self, spouse, children, siblings, and parents, wholly dependent on you.
      Diseases covered
      a) Neurological Diseases (where the disability level has been certified as 40% or more).
      b) Parkinson’s Disease
      c) Malignant Cancers
      d) Acquired Immune Deficiency Syndrome (AIDS)
      e) Chronic Renal failure
      f) Hemophilia
      g) Thalassaemia
      Key Factors
      If you are already receiving any reimbursement for the treatment from your insurance company or employer, deductions cannot be claimed. If you are receiving partial reimbursement, the balance amount can be used for a deduction.
      A certificate would be required from a specialist working in a government hospital, as proof for the specified ailment.

      • Thanks Hemant, this information was very usefull. Is there any other way to reduce tax deduction if I’m in 30% slab other than 1,20,000 and my parents are not disabled.

      • Thanks for the detailed info.
        Quite useful. One question :

        If someone is taking care of a disabled person but that person is not related to him, is this considered as donation / charity ?

        Please reply for better understanding.

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