Finance Minister Nirmala Sitharaman has presented the Union Budget 2026, keeping income tax slabs unchanged. The new income tax regime, now the default, continues to offer lower tax rates but without most exemptions and deductions. However, the Income Tax Act, 2025, will come into force from April 1, replacing the six-decade-old law.
With the financial year ending on March 31, taxpayers still have a short window to legally reduce their tax outgo. Here’s what you can do before the deadline.
No Change In Tax Slabs, New Law From April 1
Under the new tax regime, income up to Rs 12 lakh remains tax-free, as announced last year. The slabs beyond that stay the same, with rates ranging from 5 per cent to 30 per cent depending on income levels.
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The Income Tax Act, 2025 will apply from April 1, 2026, and all Budget 2026 changes will be folded into the new law. Rules and return forms are expected shortly.
Why March 31 Is Important
The financial year in India ends on March 31. It is also the final cut-off for making tax-saving investments, paying eligible expenses to claim deductions, and completing advance tax obligations.
Missing the deadline can mean higher tax liability and penalties.
How To Save Taxes Before March 31
Before making any investment, check which tax regime works better for you.
- New regime: Lower tax rates, but most deductions like Section 80C, 80D, and HRA are not allowed.
- Old regime: Higher tax rates, but multiple deductions and exemptions can significantly reduce taxable income.
Although the new regime is the default, individuals can still choose the old regime while filing their income tax return. If you plan to claim deductions, the old regime is essential.
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Use Section 80C
Section 80C remains the most effective tax-saving tool under the old regime, offering deductions of up to Rs 1.5 lakh. Under this section, the common options include:
- Employee Provident Fund (EPF)
- Public Provident Fund (PPF)
- ELSS mutual funds
- Life insurance premiums
- Home loan principal repayment
- Children’s tuition fees
Many salaried taxpayers do not fully utilise this limit. A last-minute PPF deposit or ELSS investment can still help.
Health Insurance Can Cut Your Tax Bill
Premiums paid for health insurance qualify under Section 80D:
- Up to Rs 25,000 for self, spouse, and children
- An additional Rs 25,000 for parents
- Up to Rs 50,000 if parents are senior citizens
This deduction is available only if the premium is paid before March 31.
Home Loan Benefits
Home loan borrowers can claim:
- Up to Rs 2 lakh on interest paid under Section 24(b)
- Principal repayment under Section 80C.
National Pension System (NPS)
The National Pension System (NPS) offers an additional deduction of Rs 50,000 under Section 80CCD(1B), over and above the Rs 1.5 lakh 80C limit. It is one of the few ways to save more tax without replacing existing investments.
Claim Deductions On Donations
Donations to approved charities qualify for deductions under Section 80G. Not all donations are fully deductible, so ensure the organisation is registered and keep proper receipts.
Check Capital Gains And Losses
If you sold property, shares, or mutual funds during the financial year, review your capital gains. Long-term gains on property can be saved by investing in Section 54EC bonds. Capital losses can also be set off against gains. Unused losses can be carried forward for up to eight years.
Review Salary Exemptions
If applicable, ensure you have claimed exemptions such as:
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Meal coupons
- Telephone and internet reimbursements
Get Your Documents In Order
As the financial year closes, make sure all your tax-related documents are in place to avoid last-minute stress and missed deductions. This includes investment proofs, insurance premium receipts, rent receipts, donation certificates, and capital gains statements. Incomplete or misplaced paperwork is one of the most common reasons taxpayers fail to claim eligible deductions.
