Tax Planning in the New Era
With the Income Tax Act, 2025 now governing your finances, tax planning isn’t just about stuffing money into 80C instruments anymore. The landscape has shifted, and so must your strategy.
🔴 Latest Update — September 2026
- FAST-DS Disclosure Window: Taxpayers with undisclosed foreign assets/income can regularise until 31 December 2026 at 60% effective rate (30% tax + 30% penalty) for assets up to ₹1 crore, or flat ₹1 lakh fee for already-taxed or non-resident-acquired assets up to ₹5 crore.
- Remittance Verification: The Income-tax Department is examining outward remittances of about ₹1.29 lakh crore — ensure all foreign investments and payments are properly documented with Form 15CB certification.
- Form ITR-BN Introduced: New form for return filing in search and requisition cases (Income-tax (Third Amendment) Rules, 2026, notified July 27, 2026).
- Second Tranche of Forms: Additional statutory forms rolled out on June 30, 2026 under the new Income-tax Rules, 2026.
Strategy 1: Leverage the ₹12.75 Lakh Zero-Tax Threshold Under Section 156
Under the new regime, income up to ₹12 lakh is tax-free thanks to Section 156 (formerly 87A) rebate up to ₹60,000, and with the ₹75,000 standard deduction, salaried individuals earning up to ₹12.75 lakh pay zero tax. If your income is near this threshold, consider deferring bonuses or structuring salary components to stay within it.
Strategy 2: Maximise NPS Contributions (Both Regimes)
The employer’s NPS contribution up to 14% of salary under Section 124(2) (formerly 80CCD(2)) is deductible under both old and new tax regimes. This is one of the few deductions that works across regimes. Additionally, the employee’s own contribution (Section 124(1B), formerly 80CCD(1B)) of up to ₹50,000 is available under the old regime.
Strategy 3: Use the Updated Allowance Limits
Under the new IT Rules 2026:
- Children’s Education Allowance: ₹3,000/month/child (up from ₹100)
- Hostel Allowance: ₹9,000/month/child (up from ₹300)
- Free Meals: ₹200/meal (up from ₹50)
- Non-Cash Gifts: ₹15,000/year (up from ₹5,000)
Ensure your salary structure captures these updated limits.
Strategy 4: Apply for NIL-TDS Certificate Under Section 247
If your total income is below the taxable threshold, apply for a NIL-TDS certificate under Section 247 at the start of the year. This prevents unnecessary TDS deductions on salary, interest income, and other payments. Particularly useful for:
- 🧓 Retirees with interest income below taxable limits
- 🎓 Students earning from internships or part-time work
- 📊 Small investors with dividend/interest income below threshold
Strategy 5: Claim Refunds on Belated Returns
If you missed filing returns in previous years and had excess TDS deducted, the new Act allows refund claims on belated and revised returns under Section 52. Don’t leave money on the table.
Strategy 6: Structure Business Income via Presumptive Taxation
If you’re a professional or small business owner, presumptive taxation under Section 63 (formerly 44AB) (declaring profits at a fixed percentage of turnover) can significantly reduce compliance burden and effective tax rates.
Strategy 7: Capital Gains Harvesting
If you hold equity investments, consider booking long-term capital gains up to ₹1.25 lakh annually to utilise the exempt threshold. Reinvest immediately to reset your cost basis. For equity, refer to Section 196 (formerly 111A) for STCG and Section 197 (formerly 112A) for LTCG.
Strategy 8: Health Insurance for the Entire Family
Under the old regime, Section 126 (formerly 80D) allows deductions for health insurance premiums — up to ₹25,000 for self/family and an additional ₹50,000 for senior citizen parents. This totals ₹75,000 in deductions.
Strategy 9: Home Loan Benefits (Old Regime)
If you’re in the old regime, the combination of Section 123 (formerly 80C) for principal up to ₹1.5L and Section 22(1)(b) (formerly 24(b)) for interest up to ₹2L can provide up to ₹3.5 lakh in deductions on self-occupied property.
Strategy 10: Charitable Donations (Section 133)
Donations to approved institutions qualify for deductions under Section 133 (formerly 80G) — ranging from 50% to 100% of the donated amount. Keep all donation receipts and 80G certificates for filing.
New Strategy 11: FAST-DS for Foreign Assets
If you have undisclosed foreign assets (bank accounts, investments, property):
- Deadline: 31 December 2026
- Small taxpayers (≤₹1 crore): 60% effective rate (30% tax + 30% penalty)
- Already-taxed/NR-acquired (≤₹5 crore): Flat ₹1 lakh fee
- Benefit: Immunity from further tax, penalty, and prosecution under Black Money Act, 2015
Action Checklist for FY 2026-27
- 📊 Calculate tax under both regimes — choose the lower one
- 💰 Maximise NPS contributions — employer + employee under Section 124
- 📋 Update salary structure — capture new allowance limits
- 🏦 Apply for NIL-TDS under Section 247 if eligible
- 🌍 Review foreign assets — consider FAST-DS before 31 Dec 2026
- 📄 File ITR on time under Section 52 — avoid losing refund eligibility
Ready to optimise your taxes? Connect with SmartAITax for an AI-powered tax planning consultation tailored to your income profile.
