Last updated: April 2026

Tax planning is the legal arrangement of income, investments, and deductions to minimise an Indian taxpayer's annual tax liability. It works at three levels: regime choice, deduction stack, and timing.

Key facts:

Regime choice. The new regime is default and usually wins below ~₹3.5–4 lakh of annual deductions. Above that, the old regime — with 80C, 80D, HRA, 24(b), LTA, and standard deduction — typically wins for higher earners.

80C (₹1.5 lakh limit) covers EPF, PPF, ELSS mutual funds, life insurance premium, home loan principal, NSC, 5-year tax-saver FDs, and Sukanya Samriddhi. Most salaried taxpayers exhaust 80C through EPF alone — the marginal benefit of an extra ELSS contribution is then zero unless calibrated against actual EPF.

80CCD(1B) adds an extra ₹50,000 deduction for NPS Tier-1 contributions, on top of 80C.

80D caps health insurance premium deductions at ₹25,000 (self/spouse/children) plus another ₹25,000–₹50,000 for parents (the higher cap if parents are above 60).

HRA under Section 10(13A) is the least of actual HRA received, rent paid minus 10% of basic, and 50% (metro) or 40% (non-metro) of basic. Documentation (rent agreement, receipts, landlord PAN if rent > ₹1 lakh/year) is essential.

Capital gains harvesting: book listed equity LTCG up to the ₹1 lakh annual exemption each year; offset realised losses against gains within the same head.

Advance tax in four instalments prevents Section 234B and 234C interest at 1% per month.

Example. A 30%-bracket professional contributing ₹50,000 to NPS Tier-1 under 80CCD(1B) saves ₹15,600 in tax annually — a clean win if they were going to add to retirement savings anyway.

Related: tax-saving planner (/calculators/tax-saving-planner), Tax Deductions: India Guide (/glossary/tax-deductions-us-india-revised-tax), ReviseTax services (/service)