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Tax Planning

Last-Minute Tax Planning Tips for FY 2025-26

#tax planning#tax saving#80C#deductions#FY2025-26

Time is Running Out!

With only 3 months left before the financial year ends on March 31, 2026, it's crucial to optimize your tax planning now. Don't wait until the last minute!

Quick Tax-Saving Checklist

Section 80C Investments (Limit: ₹1.5 Lakh)

Traditional Options:

  • ✓ Public Provident Fund (PPF) - 7.1% return, completely tax-free
  • ✓ Equity Linked Savings Scheme (ELSS) - Market-linked returns, 3-year lock-in
  • ✓ National Savings Certificate (NSC) - 7.7% return, 5-year tenure
  • ✓ 5-Year Tax Saving FD - 6-7% returns, fixed income

Don't Forget:

  • Home loan principal repayment
  • Life insurance premiums (traditional policies)
  • Children's tuition fees
  • Sukanya Samriddhi Yojana (for girl child)

Use our Tax Calculator to see your potential savings.

Section 80D - Health Insurance

Premium Deductions:

  • ₹25,000 for self, spouse, and children
  • Additional ₹25,000 for parents (under 60)
  • Additional ₹50,000 for senior citizen parents
  • ₹5,000 for preventive health checkup

Pro Tip: Pay annual premium before March 31 to claim full deduction.

Section 80CCD(1B) - NPS Additional Deduction

Extra ₹50,000 Deduction:

  • Over and above 80C limit
  • Invest in National Pension System
  • Long-term retirement planning
  • Equity exposure with tax benefits

HRA Exemption Optimization

If you're salaried and paying rent:

  • Submit rent receipts to employer
  • If annual rent > ₹1 lakh, provide landlord's PAN
  • HRA exemption = minimum of:
    • Actual HRA received
    • 50% of salary (metro) or 40% (non-metro)
    • Rent paid minus 10% of salary

New vs Old Tax Regime: Last Chance to Decide

Old Tax Regime Benefits

When to Choose:

  • High deductions available (>₹2.5 lakhs)
  • Home loan interest payment
  • Multiple 80C investments already made
  • LTA, HRA claims applicable

New Tax Regime Benefits

When to Choose:

  • Lower deductions (<₹2 lakhs)
  • Don't want hassle of proof submission
  • Simple tax calculation preferred
  • Standard deduction of ₹50,000 sufficient

Compare both: Use our Old vs New Tax Regime Calculator to decide.

Read detailed analysis: Old vs New Tax Regime 2025

Smart Strategies for December-March Period

1. Loss Harvesting in Equity

  • Review your stock portfolio
  • Book long-term losses to offset gains
  • No tax on LTCG up to ₹1.25 lakh on equity
  • STCG taxed at 20%

2. Prepay Home Loan Partially

  • Interest deduction: up to ₹2 lakh (Section 24)
  • Principal repayment: counts towards 80C
  • Reduces future interest burden
  • Check prepayment charges first

3. Donate to Eligible Charities

Section 80G Deductions:

  • 50% or 100% of donation amount
  • PM CARES Fund, CM Relief Fund eligible
  • Get tax exemption certificate
  • Must donate before March 31

4. Claim Leave Travel Allowance (LTA)

  • Can claim twice in a block of 4 years
  • Current block: 2022-2025
  • If unused, claim before March 2026
  • Keep travel tickets and boarding passes

5. Medical Reimbursement

  • Keep all medical bills
  • Including medicines, doctor consultations
  • Can be claimed under 80D
  • Digital payments give better proof

Common Mistakes to Avoid

DON'T:

  1. ❌ Invest just for tax saving - focus on financial goals
  2. ❌ Buy insurance you don't need
  3. ❌ Miss submission deadline to employer (usually Jan-Feb)
  4. ❌ Ignore proof submission for claimed deductions
  5. ❌ Forget to file ITR even if no tax liability

DO:

  1. ✓ Plan by mid-January
  2. ✓ Keep digital copies of all proofs
  3. ✓ Review Form 16 carefully
  4. ✓ File ITR before July 31, 2026
  5. ✓ Link PAN with Aadhaar if not done

Tax-Saving Investment Comparison

| Option | Return | Lock-in | Risk | Tax Benefit | |--------|--------|---------|------|-------------| | PPF | 7.1% | 15 years | Low | 80C + EEE | | ELSS | 12-15%* | 3 years | High | 80C + LTCG exempt up to 1.25L | | NSC | 7.7% | 5 years | Low | 80C (interest taxable) | | Tax Saver FD | 6-7% | 5 years | Very Low | 80C (interest taxable) | | NPS | 10-12%* | Till 60 | Medium | 80C + 80CCD(1B) |

*Returns not guaranteed, market-linked

Action Plan for Next 3 Months

December 2025:

  • Calculate total tax liability
  • Identify deduction gaps
  • Review existing investments

January 2026:

  • Make 80C investments
  • Pay health insurance premium
  • Submit proofs to employer

February 2026:

  • Complete any pending investments
  • Verify TDS deductions
  • Update bank accounts for refunds

March 2026:

  • Last-minute investments if any
  • Keep all documents ready
  • Plan for next financial year

Related Resources

Disclaimer: Tax laws are subject to change. Consult a tax advisor for personalized advice. Information accurate as of December 2025.