When advising on LEGAL tax minimization strategies for Indian taxpayers — salaried individuals, self-employed professionals, and business owners.
Accountant-reviewed — general reference, not personal advice
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Accountant-reviewed. Reviewed by Mayur Deokar (615638) on Jun 6, 2026. Review does not create a client relationship and is not a guarantee for any specific taxpayer or transaction.
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Annual exemption
₹1,25,000ITA s 112A
s 80C (PPF, ELSS, LIC, EPF)
₹1,50,000 combined capITA s 80C
s 80CCD(1B) (NPS extra)
₹50,000 over and above 80CITA s 80CCD(1B)
s 80D (health insurance)
₹25,000 self + ₹25,000 parents (₹50,000 if senior)ITA s 80D
s 24(b) (home loan interest)
₹2,00,000 (self-occupied)ITA s 24(b)
s 80E (education loan interest)
No cap (up to 8 years)ITA s 80E
s 80GG (rent, no HRA)
₹60,000/year cap is correct, but deduction is the least of: (a) ₹5,000/month (₹60,000/year), (b) 25% of total income, or (c) actual rent minus 10% of total incomeITA s 80GG
s 80TTA (savings interest)
₹10,000 (₹50,000 for seniors under 80TTB)ITA s 80TTA/80TTB
Standard deduction
₹75,000Finance Act 2024
Employer NPS (s 80CCD(2))
Up to 14% of basicITA s 80CCD(2)
Home loan interest (let-out)
No limit (rented property)ITA s 24(b)
Everything else (80C, 80D, HRA)
NOT available in new regimeITA s 115BAC
Buildings (factory)
10%ITA s 32
Buildings (other)
5%ITA s 32
Plant & machinery (general)
15%ITA s 32
Computers and software
40%ITA s 32
Motor vehicles
15% (30% commercial)ITA s 32
Intangible assets
25%ITA s 32
Business loss
Any head except salary; 8 years carry-forwardITA s 72
STCL
Against STCG or LTCG; 8 yearsITA s 74
LTCL
Against LTCG only; 8 yearsITA s 74
House property loss
Any income, capped ₹2,00,000/year; 8 yearsITA s 71B
Unabsorbed depreciation
Unlimited carry-forwardITA s 32(2)
LTCG on Listed Equity – Annual exemption
₹1,25,000ITA s 112A
Reviewed against the cited tax authorities by Mayur Deokar on 2026-06-06. Items flagged for further clarification are tracked separately and excluded here. This block is generated from verified skill_facts — edit the facts, not the prose.
Section 1 — Quick Reference
| Field | Value |
|---|---|
| Country | India (Republic of India) |
| Currency | INR (₹) |
| Tax year | Financial Year: 1 April – 31 March (FY 2026-27) |
| Primary legislation | Income Tax Act, 2025 (replacing ITA 1961 from 1 April 2026); section references below show both old (1961) and new (2025) numbers |
| Anti-avoidance | GAAR (Chapter X-A / Chapter XIX of IT Act 2025); SAAR provisions throughout |
| Tax authority | Central Board of Direct Taxes (CBDT); Income Tax Department |
| Filing deadline | 31 July (individuals without audit); 31 October (businesses requiring audit) |
| Individual top rate | 30% + 4% health & education cess = 31.2% (old regime); surcharge up to 25% on high incomes |
| Corporate tax (domestic, new manufacturing) | 15% + cess (s 115BAB) |
| Corporate tax (domestic, general) | 22% + cess (s 115BAA) or 25%/30% under regular provisions |
| GST rates | 0%, 5%, 12%, 18%, 28% |
New Regime Tax Slabs (Default from FY 2025-26 onwards)
| Taxable Income (₹) | Rate |
|---|---|
| 0 – 4,00,000 | 0% |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| 24,00,001+ | 30% |
Old Regime Tax Slabs
| Taxable Income (₹) | Rate |
|---|---|
| 0 – 2,50,000 | 0% |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| 10,00,001+ | 30% |
Old Regime Deductions (New Section Numbers from IT Act 2025)
| Deduction | Old s | New s | Limit | Notes |
|---|---|---|---|---|
| PPF, ELSS, LIC, EPF, SSY, tuition fees | 80C | 123 | ₹1,50,000 | Combined cap across all instruments |
| NPS employee extra contribution | 80CCD(1B) | 124(3) | ₹50,000 | Over and above ₹1.5L cap. Old regime only |
| Employer NPS contribution | 80CCD(2) | 124(2) | 14% of basic (new regime) / 10% (old) | Available in BOTH regimes |
| Health insurance premium | 80D | 126 | ₹25,000 self + ₹25,000 parents (₹50,000 if senior) | Preventive health check-up ₹5,000 within limit |
| Home loan interest (self-occupied) | 24(b) | 55(1) | ₹2,00,000 | Old regime only for self-occupied |
| Education loan interest | 80E | 129 | No cap (up to 8 years) | Often overlooked. Interest component only |
| Rent paid (no HRA received) | 80GG | 134 | ₹60,000/year | For self-employed or those without HRA |
| Donations | 80G | 133 | 50% or 100% of donation | Qualifying institutions only |
| Disabled dependent | 80DD | 127 | ₹75,000/₹1,25,000 | Severe disability higher limit |
| Interest on savings account | 80TTA | 137 | ₹10,000 | ₹50,000 for senior citizens (80TTB/138) |
New Regime Deductions (Limited)
| Deduction | Available? | Notes |
|---|---|---|
| Standard deduction | Yes — ₹75,000 | Salaried and pensioners |
| Employer NPS (80CCD(2)/124(2)) | Yes | Up to 14% of basic |
| Home loan interest (let-out property) | Yes | No limit on interest for rented property |
| Family pension deduction | Yes | ₹15,000 or 1/3 of pension, whichever is lower |
| Agniveer Corpus (80CCH(2)) | Yes | Specific to Agniveer scheme |
| Everything else (80C, 80D, HRA, etc.) | No | Forfeited in exchange for lower rates |
Depreciation (Business Income)
| Asset Block | Rate (WDV) |
|---|---|
| Buildings (factory) | 10% |
| Buildings (other) | 5% |
| Furniture and fittings | 10% |
| Plant and machinery (general) | 15% |
| Computers and software | 40% |
| Motor vehicles | 15% (30% for commercial vehicles in certain cases) |
| Intangible assets (patents, know-how) | 25% |
Set-Off Rules
| Loss Type | Set Off Against |
|---|---|
| Business loss | Any head of income EXCEPT salary (within same year) |
| Capital loss — short-term | Short-term or long-term capital gains |
| Capital loss — long-term | Long-term capital gains only |
| House property loss | Any income, capped at ₹2,00,000 per year |
| Speculation business loss | Speculation business income only |
Carry Forward
| Loss Type | Carry Forward Period |
|---|---|
| Business loss | 8 years |
| Capital loss | 8 years |
| Unabsorbed depreciation | Unlimited |
| House property loss | 8 years |
Section 6 — Timing Strategies
| Strategy | Detail |
|---|---|
| Invest in 80C by 31 March | ELSS (3-year lock-in), PPF, LIC premiums, SSY, NPS. Last-minute investments still qualify for current FY deduction |
| Advance tax instalments | Due 15 June (15%), 15 Sept (45%), 15 Dec (75%), 15 March (100%). Defer to later instalments if income is seasonal — avoids unnecessary early payments |
| Harvesting LTCG exemption (listed equity) | LTCG on listed shares/equity MFs: ₹1,25,000 exempt annually (s 112A). Sell and rebuy annually to crystallise gains within exemption |
| Rent receipts | Collect and preserve rent receipts. If HRA claimed, landlord PAN mandatory if rent >₹1,00,000/year |
| Medical bills | Aggregate family medical expenses before 31 March for 80D claims. Preventive health check-up within ₹5,000 sub-limit |
| Capital gains reinvestment | s 54 (residential house from house sale), s 54EC (specified bonds — ₹50 lakh cap, 5-year lock-in). Invest within specified timelines to defer/exempt gains |
| NPS contribution timing | Employer NPS: ensure reflected in Form 16 / Form 130 (new). Self-contribution: invest by 31 March for current-year deduction |
Section 7 — GST Optimization
| Topic | Detail |
|---|---|
| Registration threshold | ₹40 lakh for goods (₹20 lakh in special category states); ₹20 lakh for services (₹10 lakh in special category states) |
| Composition scheme | Turnover ≤₹1.5 crore: pay 1% (manufacturers/traders), 5% (restaurants), 6% (services). No input tax credit. No inter-state supply |
| Input Tax Credit (ITC) | Claim GST on business purchases. Must be reflected in GSTR-2B. Reverse charge on specified goods/services |
| E-invoicing | Mandatory for turnover >₹5 crore (from 1 Aug 2023). Generates IRN via NIC portal. Ensures ITC accuracy |
| Inverted duty structure refund | If input GST rate > output GST rate, claim refund of accumulated ITC |
| Export — zero-rated | Exports are zero-rated. Option: export under LUT (Letter of Undertaking) without paying IGST, or pay IGST and claim refund |
| Place of supply rules | Critical for services: B2B services generally taxed at recipient location. Optimise for IGST vs SGST+CGST |
Section 9 — Investment & Retirement
| Instrument | Tax Treatment | Notes |
|---|---|---|
| PPF | EEE (exempt-exempt-exempt) | ₹1.5L/year cap. 15-year lock-in. Interest tax-free |
| ELSS | Deduction under 80C. LTCG >₹1.25L taxed at 12.5% | 3-year lock-in. Shortest among 80C options |
| NPS | Deduction on contribution. 60% lump sum tax-free at retirement | Annuity portion taxable |
| Sukanya Samriddhi (SSY) | EEE | For girl child. ₹1.5L/year within 80C cap |
| NSC | Deduction under 80C. Interest accrued qualifies for 80C in subsequent years | 5-year lock-in |
| ULIPs | 80C deduction. Tax-free maturity if premium ≤₹2.5L/year | >₹2.5L premium: LTCG on maturity |
| Direct equity / equity MFs | STCG: 20%. LTCG >₹1.25L: 12.5%. No indexation | Annual LTCG harvesting strategy applies |
| Debt MFs | Taxed at slab rates | No indexation benefit (post FY 2023-24 rules) |
| Real estate | LTCG: 12.5% (without indexation from FY 2024-25). STCG: slab rates | s 54/54EC reinvestment exemptions available |
Scrutiny Triggers
| Trigger | Risk |
|---|---|
| HRA claimed without genuine rent payment | Disallowed; penalty |
| Bogus 80C/80D receipts | Prosecution possible. LIC/health insurer reports to IT dept |
| Cash deposits >₹10 lakh in savings or ₹2.5 lakh in current account | Automatic SFT reporting to IT department |
| High-value transactions (immovable property >₹30 lakh, securities >₹10 lakh) | Statement of Financial Transactions (SFT) cross-matching |
| Income mismatch with AIS (Annual Information Statement) | Most common trigger for notice u/s 148 |
| Capital gains without payment of advance tax | Interest u/s 234B and 234C |
| Gift from non-relatives exceeding ₹50,000 | Taxable as income u/s 56(2)(x) / new equivalent |
| Benami property transactions | Benami Transactions (Prohibition) Act — severe penalties including confiscation |
| Clubbing provisions violations | Transferring income-generating assets to spouse/minor → income attributed back |
| Presumptive tax with inconsistent lifestyle | Risk of scrutiny if declared income is disproportionately low |
Section 11 — Annual Tax Planning Calendar
| When | Action |
|---|---|
| April | New FY begins. Choose tax regime with employer (Form 12BBA). Start SIP in ELSS/PPF. Review salary structure with HR |
| May–June | Advance tax 1st instalment due 15 June (15%). Declare HRA, LTA with employer. Submit investment declaration |
| July 31 | ITR filing deadline (non-audit individuals). Prior-year return must be filed to carry forward losses |
| September | Advance tax 2nd instalment due 15 Sept (45%). Mid-year investment review |
| October 31 | Audit report filing deadline (businesses). Review capital gains position |
| November | Execute LTCG harvesting strategy. Review medical expenses for 80D |
| December | Advance tax 3rd instalment due 15 Dec (75%). Final push on 80C investments |
| January–February | Collect rent receipts, medical bills, donation receipts. HRA landlord PAN confirmation |
| March (before 31 March) | Critical month. Complete 80C, 80D, NPS investments. Final advance tax instalment due 15 March (100%). Pay pending insurance premiums. Sell/rebuy for LTCG harvesting. Submit investment proofs to employer |
New regime: ₹15,00,000 – ₹75,000 (standard deduction) = ₹14,25,000 taxable. Tax: ₹1,57,500 + cess = ₹1,63,800.
Old regime with deductions: ₹15,00,000 – ₹50,000 (standard) – ₹1,50,000 (80C) – ₹50,000 (80CCD(1B)) – ₹25,000 (80D) – ₹2,00,000 (home loan s 24(b)) – ₹2,40,000 (HRA) = ₹8,85,000 taxable. Tax: ₹77,000 + cess = ₹80,080.
Saving under old regime: ~₹83,720. Old regime clearly wins with ₹6.65L deductions.
Salary restructure: basic ₹8,00,000. Employer contributes 14% to NPS = ₹1,12,000.
This ₹1,12,000 is deductible in BOTH regimes. At 20% marginal rate: ₹22,400 tax saving + retirement corpus growth.
Portfolio unrealised gains: ₹3,00,000. Sell units showing ₹1,25,000 LTCG → zero tax (exempt). Rebuy next day. Reset cost base. Remaining ₹1,75,000 deferred to next year.
Without harvesting: eventual ₹3,00,000 – ₹1,25,000 exempt = ₹1,75,000 × 12.5% = ₹21,875 tax. With annual harvesting over 3 years: ₹0 tax. Saving: ₹21,875.
Small trader, ₹1.5 crore turnover (all digital). Deemed profit: 6% = ₹9,00,000. Tax under old regime with 80C: ~₹52,000 + cess.
Actual profit: ₹12,00,000 (8%). Electing regular taxation: higher tax + audit + compliance cost. Presumptive saves ~₹40,000+ in tax and ₹50,000+ in compliance costs.
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Accountant-reviewed
Reviewed by a named licensed practitioner against the stated sources, as general reference material.
Accountant-reviewed · Guide version 10
Reviewed by Mayur Deokar · 6 June 2026
A named accountant reviewed this complete Guide version within the stated scope. It is not a guarantee.
View review record →Other India computations in the OpenAccountants Tax Library.
Rendered from the facts database · facts last reviewed Jun 6, 2026. General reference only — confirm with a qualified professional before acting.
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