Every July, same story. Someone gets their Form 16, does a rough calculation, sees how much TDS their employer cut, and wonders if they overpaid. Usually they did.
The annoying part? Most of it was avoidable. Not through anything clever or risky. Just basic planning that nobody got around to doing in April because April felt too early, and by the time February came around it was too late to do it properly.
FY 2026-27 just started. Here’s what to actually do with it.
1. First, Pick a Regime and Stop Second-Guessing It
Both regimes are still on the table in FY 2026-27. The new regime is the default now, so if you submitted nothing to your employer, you’re already in it.
New regime: lower slab rates, almost no deductions. Old regime: higher rates but you can claim 80C, HRA, 80D, home loan interest, and more. Neither is universally better. It depends on your numbers.
Rough rule of thumb: if your total eligible deductions cross Rs. 3 to 3.5 lakhs, the old regime usually wins. Below that, the new regime tends to be simpler and cheaper. But run the actual numbers for your salary. Don’t guess.
And please don’t pick a regime in April on instinct and realise in January you got it wrong. A tax consultant can do this comparison in twenty minutes. It’s worth the call.
2. Section 80C Is Not a Strategy. It’s a Starting Point.
The Rs. 1.5 lakh limit under 80C has been the same for years. Honestly, it needs to be revised upward, but that’s a different conversation. For now, what we see constantly is people scrambling to fill this in February by throwing money into ELSS. That’s not planning. That’s panic investing.
What counts under 80C: EPF (employee share), PPF, ELSS, life insurance premiums, home loan principal, kids’ tuition fees, NSC. Many salaried people already fill the entire Rs. 1.5 lakh limit just through EPF. If that’s you, putting more into ELSS does nothing for your 80C.
Check what’s already going in. Then figure out the gap. Simple.
Quick check before investing more under 80C:
- Add up your annual EPF deduction from salary slips
- Include any LIC or term plan premiums you pay
- Add home loan principal if applicable
- Whatever is left to reach Rs. 1.5 lakhs is your actual investment gap
3. HRA: Most People Claim Less Than They’re Entitled To
HRA is probably the most under-claimed deduction for salaried people in Mumbai. Not because it’s complicated, but because people just leave it to HR and move on. HR is not your tax advisor. They work off whatever you submit.
The exemption is the lowest of three: actual HRA received from your employer, actual rent paid minus 10% of basic salary, or 50% of basic salary for metro cities (40% for non-metro). Mumbai is metro, so 50% applies.
Two things people miss regularly. Paying rent to a parent? You can still claim HRA, but the rent needs to actually be paid and the parent needs to show it as income. Annual rent above Rs. 1 lakh? You need the landlord’s PAN. Skip that and it becomes a problem later.
4. NPS Is Underused. Seriously.
NPS gets ignored way more than it should. Section 80CCD(1B) gives you an extra Rs. 50,000 deduction on top of 80C. Completely separate bucket. Most people don’t use it.
Then there’s 80CCD(2), which is your employer’s NPS contribution. If your company puts up to 10% of your basic into NPS on your behalf, that whole amount is tax-exempt and doesn’t touch any of your other deduction limits.
Yes, NPS locks the money until retirement. But if you’re earning enough to be in the 30% bracket and you’re skipping this because of the lock-in, you’re paying real tax today to avoid a restriction that’s decades away. Worth rethinking.
5. Home Loan Borrowers Have More Leeway Than They Think
If you’re servicing a home loan, you’re looking at two separate deductions: Section 80C for the principal repayment (subject to the Rs. 1.5 lakh cap), and Section 24(b) for the interest component.
Under 24(b), you can claim up to Rs. 2 lakhs per year on interest paid for a self-occupied property. For a let-out property, there’s no ceiling. You do need to add notional rental income to your income, but you can also deduct 30% for standard deductions on top of the actual interest.
People with second properties, or those who moved cities and are renting out their first flat, often don’t calculate this correctly. Claiming too little or mis-reporting rental income are both errors that generate scrutiny notices. If you have two properties, a proper review with a chartered accountant firm in Mumbai is worth the time.
6. Health Insurance Deductions Under 80D
Section 80D is simple enough but frequently under-utilised. You can claim up to Rs. 25,000 for health insurance premiums paid for yourself, your spouse, and your children. If you also pay for your parents’ health insurance, that’s another Rs. 25,000. If your parents are senior citizens, the limit on their side goes up to Rs. 50,000.
That’s a potential Rs. 75,000 in deductions from 80D alone, on top of everything else. And yet a lot of people either skip this or only claim the self premium because they never added parents to the calculation.
One thing that trips people up: you cannot claim 80D if you paid the premium in cash. It needs to be through a non-cash mode. Keep receipts and payment proofs.
7. Standard Deduction and What’s Actually Changed
For FY 2026-27, the standard deduction is Rs. 75,000 for salaried individuals under the new regime, revised upward in the Union Budget. Under the old regime, it remains Rs. 50,000.
This is a flat deduction. No receipts, no conditions. It just comes off. The point here is factoring this into your regime comparison correctly because the new regime’s higher standard deduction narrows the gap with the old regime for some salary brackets.
8. When Your Employer’s Salary Structure Is the Real Problem
This one most people never think about. Your salary structure is a tax decision. Not just your investments.
A CTC loaded heavily towards basic and DA means higher EPF, which is good for retirement but also means a bigger taxable number every month. A well-structured salary with LTA, food coupons, mobile reimbursement, and professional development components can shrink the taxable portion legally, without changing what actually hits your bank account.
If you’re negotiating a new offer or got a raise and the structure is still up for discussion, this is the moment. Ask. Most employers are fine with restructuring if someone just brings it up. Most people don’t bring it up.
A CA firm that handles outsourcing services for payroll and compliance can advise on what’s actually possible within your employer’s structure, not just what’s theoretically allowed.
9. Don’t Wait for March. The Year Is Not Over.
April and May are the best months to sort this out. Nobody thinks that. Everyone thinks tax planning is a Q3 activity. It’s not.
If you wait until January, two things happen. You rush your investment decisions, picking products based on what closes the 80C gap rather than what makes sense for your goals. And your employer’s TDS doesn’t update fast enough, so February and March salaries get hit harder to make up the shortfall. Then you’re waiting for a refund.
The CA firms see this pattern every single year. Clients who come in April leave with a clean plan. Clients who call in January are mostly doing damage control.
Also worth flagging: if you have any income outside salary, freelance work, rent from a property, capital gains from selling shares or a flat, you’re in advance tax territory. Miss those quarterly instalments and sections 234B and 234C charge you interest on the shortfall. A good tax consultant in Mumbai will calendar this for you so it doesn’t sneak up.
Final Thoughts
None of this is complicated. That’s actually the frustrating part. Most of what’s covered here is basic, available to everyone, and still gets missed year after year.
People don’t overpay tax because they’re careless. They overpay because they’re busy, because April felt too early, because they assumed their employer’s payroll team had it covered. They usually don’t.
Start now. The year is long enough to get this right, but short enough that April is the last comfortable month to do it.
At JD Shah Associates, one of the leading chartered accountant firms in Mumbai, we work with salaried professionals, business owners, and growing companies across industries. Whether you need a tax consultant in Mumbai to review your regime choice, a GST consultant for your business, or an auditing firm and IPO consultancy partner for your next stage of growth, our team brings clarity and precision to every engagement. Recognised as the best CA firm in Borivali, Mumbai, we also offer outsourcing services for accounting, payroll, and compliance functions, so you can focus on your business while we take care of the numbers.
