AI Tax Saver for FY 2026-27
Share a few details and receive a written tax plan: which regime to pick, which deductions to claim, and roughly what each one saves you.
Working through your tax position...
Estimates for planning. Confirm final figures with a chartered accountant before filing.
Saving tax in FY 2026-27
Tax planning starts with a single decision: which regime to file under. Everything else follows from that. The new regime is the default and offers lower rates with almost no deductions. The old regime charges more per slab but lets you reduce taxable income substantially if you have the right investments and expenses.
Current position. Budget 2026 left slab rates unchanged for both regimes. The Income Tax Act, 2025 came into force on 1 April 2026. Under the new regime, the standard deduction is ₹75,000 and the Section 87A rebate of up to ₹60,000 means no tax on taxable income up to ₹12,00,000.
Deductions available under the old regime
| Section | Covers | Limit | Saving at 30% slab |
|---|---|---|---|
| 80C | EPF, PPF, ELSS, life insurance, home loan principal, tuition fees, NSC, 5-year FD | ₹1,50,000 | ₹46,800 |
| 80CCD(1B) | Additional NPS contribution over and above 80C | ₹50,000 | ₹15,600 |
| 80CCD(2) | Employer NPS contribution, allowed in both regimes | 10% of basic, 14% for government staff | Varies |
| 80D self | Health insurance for self, spouse and children | ₹25,000, or ₹50,000 if senior | ₹7,800 |
| 80D parents | Health insurance for parents | ₹25,000, or ₹50,000 if senior | ₹15,600 |
| 24(b) | Home loan interest on a self-occupied property | ₹2,00,000 | ₹62,400 |
| 80E | Education loan interest | No cap, 8 years | Varies |
| 80G | Donations to approved institutions | 50% or 100% of the donation | Varies |
| 80TTA | Savings account interest | ₹10,000 | ₹3,120 |
| 80TTB | Interest income for senior citizens | ₹50,000 | ₹15,600 |
| HRA | House rent allowance | Least of three tests | Often the largest single claim |
| LTA | Leave travel allowance for domestic travel | Twice in a four-year block | Varies |
Saving figures assume the 30% slab plus 4% cess. At lower slabs the saving scales down proportionately.
How the HRA exemption is worked out
Your exemption is the lowest of these three amounts:
- The actual HRA your employer pays you
- Rent paid during the year minus 10% of your basic salary
- 50% of basic salary in Delhi, Mumbai, Kolkata or Chennai, or 40% elsewhere
Keep rent receipts, and if annual rent exceeds ₹1,00,000 you must also report your landlord's PAN. Rent paid to a parent qualifies, provided the arrangement is genuine and the parent declares the income.
Comparing 80C options
| Instrument | Return | Lock-in | Risk | Taxation on exit |
|---|---|---|---|---|
| EPF | around 8.25% | Until you leave employment | None | Exempt after 5 years |
| PPF | around 7.1% | 15 years | None | Fully exempt |
| ELSS mutual fund | 11% to 14% historically | 3 years, the shortest | High | 12.5% above ₹1.25L |
| NSC | around 7.7% | 5 years | None | Interest taxable |
| Sukanya Samriddhi | around 8.2% | 21 years or marriage | None | Fully exempt |
| Tax saving FD | 6.5% to 7.5% | 5 years | None | Interest taxable |
| Life insurance premium | 4% to 6% | Policy term | Low | Conditions apply |
A sensible order of priority
- Start with what you already pay: EPF contribution and any life insurance premium already count towards 80C.
- Fill the remaining 80C gap with ELSS if you can accept equity risk, or PPF if you cannot.
- Buy adequate health insurance for yourself and your parents. The 80D deduction is a bonus, not the reason.
- Add ₹50,000 to NPS under 80CCD(1B) if you are comfortable with the withdrawal restrictions.
- Claim HRA properly if you pay rent. It is frequently the single largest exemption.
- Only then compare both regimes, using your actual claimable figures rather than aspirational ones.
Do not invest purely to save tax. A poor investment that saves ₹15,000 in tax while underperforming by ₹50,000 leaves you worse off. Choose instruments you would hold anyway, then claim the deduction they happen to carry.
Precise figures
For exact tax under both regimes with your own numbers, use the Income Tax Calculator. It shows the slab-by-slab computation and the difference between the two regimes.
Frequently asked questions
It depends on your deductions. Below roughly 3,00,000 of total deductions the new regime usually wins. Above roughly 4,50,000 the old regime often wins. Between those figures, run both through the Income Tax Calculator.
Salaried taxpayers can choose again every year when filing. Those with business or professional income who opt out of the new regime can generally return to it only once, so treat that choice as close to final.
Under the new regime, taxable income up to 12,00,000 attracts no tax because of the Section 87A rebate. With the 75,000 standard deduction, a salary of about 12,75,000 can be tax free. Under the old regime the threshold is 5,00,000 of taxable income.
Yes, but at different amounts. The new regime allows 75,000 and the old regime allows 50,000, in both cases for salaried employees and pensioners.
Only the employer contribution under Section 80CCD(2). Your own contribution under 80CCD(1B) is not deductible in the new regime.
For individuals who do not require an audit, the deadline was extended to 31 August. Audited cases are due by 31 October. Filing late attracts a fee and interest.