Tax Saving Tips for Salaried Employees FY 2026-27

Every other tip depends on this. The new regime (Section 202 (earlier 115BAC)) is the default and allows almost no deductions; the old regime keeps them but has higher slab rates. On a ₹15 lakh salary the new regime costs ₹97,500. The old regime only beats it once your deductions are large: with every deduction in the table below it falls to ₹72,280.

Salaried employees can switch regime every year when filing their return, so the choice is not permanent. Tell your employer your choice at the start of the year so TDS is right. Compare both with your own numbers in the old vs new regime calculator, or see the break-even deductions at each salary in the old vs new regime guide.

Use the ₹12 lakh rebate fully

With the ₹75,000 standard deduction and the Section 156 (earlier 87A) rebate, a salary of up to ₹12.75 lakh pays ₹0 tax. Just above that, marginal relief caps your tax at the income above the limit: a ₹12.85 lakh salary pays ₹10,400 with cess, not the full slab tax. Anyone near the limit should check where their salary lands.

Ask for employer NPS

Employer contributions to your NPS account are deductible under Section 124 (earlier 80CCD(2)) up to 14% of basic plus DA in the new regime (10% in the old). Many employers let you restructure part of your CTC this way. On a ₹15 lakh CTC with basic at 40%:

Tax falls by ₹40,020 and ₹84,000 a year goes into your NPS account, while monthly in-hand drops by only ₹3,665. The saving here is unusually large because the lower gross salary also brings marginal relief into play. NPS money is locked in until retirement with limited withdrawals, so only do this with money you can leave invested. An overall ₹7.5 lakh yearly cap applies to employer contributions to PF, NPS and superannuation together.

Fill Section 123 (earlier 80C): ₹1,50,000

Your own EPF contribution counts first, so check your payslip before investing more. Other eligible items include PPF, ELSS mutual funds (three-year lock-in), life insurance premiums, home-loan principal, children's tuition fees (up to two children), NSC, Sukanya Samriddhi and five-year tax-saving bank deposits.

Add NPS under Section 124 (earlier 80CCD(1B)): ₹50,000 more

Your own NPS contribution gets an extra ₹50,000 deduction on top of the ₹1,50,000 limit.

Claim health insurance under Section 126 (earlier 80D)

Premiums for yourself, your spouse and children are deductible up to ₹25,000 a year (₹50,000 if you are a senior citizen), with a separate limit of the same size for your parents' policy.

Claim HRA and home-loan interest

If you pay rent, the HRA exemption can be the largest single item; see the HRA calculator. If you live in a home you own with a loan, interest up to ₹2,00,000 a year is deductible under Section 22 (earlier 24(b)).

How the deductions add up on a ₹15 lakh salary

Even with Section 123 (earlier 80C), NPS, health insurance and a ₹2,40,000 HRA exemption, the old regime still costs more than the new regime's ₹97,500. Only when home-loan interest is added on top does it come out cheaper. At this salary the old regime needs more than about ₹5.4 lakh of deductions besides the standard deduction to win.

• Harvest long-term gains. The first ₹1.25 lakh of long-term gains on listed shares and equity funds each year is tax-free. Selling and buying back to use it resets your cost without tax. See capital gains tax on shares and F&O.
• Declare investments and proofs on time. If your employer doesn't have them, TDS is higher and you wait for a refund.
• Check your AIS before filing. Interest, dividends and share sales reported there must match your return.
• Restructure salary where your employer allows: employer NPS works in both regimes, though the cap is 10% of basic in the old regime.

• Buying insurance or locking money away only for the tax deduction, when the product doesn't suit you.
• Investing for Section 123 (earlier 80C) without counting the EPF already deducted from your salary.
• Choosing the old regime out of habit when your deductions are too small to make it cheaper.
• Rushing investments in March that you then can't afford, or missing the proof deadline and losing TDS benefit.