Income Tax Saving Options Before 31st March: Smart Moves

March-end tax planning works best when it is treated as a compliance exercise, not a last-minute buying exercise. The right approach to begin proper tax planning is to first choose the tax regime, then fill only the eligible deduction gaps, and keep documentation ready for payroll or ITR reporting.

This matters because the new tax regime (Section 115BAC) is now the default, and it comes with a clear trade-off of lower slab rates but limited deductions. The old regime can still be beneficial, but only when a taxpayer genuinely uses the key deductions such as 80C, 80D, home-loan interest (24(b)), rent benefits (HRA/80GG), and education loan interest (80E).

With March 31 as the year-end financial checkpoint, this blog covers what to prioritise for both salaried employees and self-employed taxpayers.

Why Does March 31 Matter For Tax Saving?

Two reasons make March a high-impact period:

1. Eligibility is tied to the financial year. Investments, premiums, donations, and other qualifying payments need to fall within the year to be counted.
2. Salaried tax outcomes depend on payroll cut-offs. Even if a payment is made by March 31, the employer may not factor it into TDS if the proofs are submitted late. This means the benefit may come later as a refund when filing the return.

New Tax Regime: What It Offers In FY 2025–26 (AY 2026–27)

• Slab rates are broader under the new regime and many taxpayers benefit from simpler computation
• A standard deduction of ₹75,000 is available for salaried taxpayers in the new regime
• To use the new regime, common exemptions and deductions such as HRA and housing loan interest under Section 24(b) are generally not available. However, you can claim tax exemption on home loan interest for let-out property under the new regime.

Old Tax Regime: When It Still Works Well

• Old regime makes sense when deductions and exemptions are substantial and consistently available—especially for taxpayers claiming HRA (rent + salary structure), home loan interest (24(b)) for a self-occupied property, regular use of 80C + 80D, and education loan interest (80E).
• If deductions and exemptions are limited, the new regime often wins on simplicity and slab rates. If deductions are meaningful and well-documented, old regime can still produce a lower tax outflow.

What Are The Key Deductions To Close Before 31 March?

Below is a clean checklist of commonly used, high-value provisions (most are relevant mainly in the old regime, except where noted).

1. Section 80C: Core Deductions (Up To The Overall Limit)

Section 80C covers a set of specified payments/investments (life insurance premium, PF-type contributions, specified deposits, tuition fees, home-loan principal component, etc.). Eligibility and sub-conditions vary by item, it is best to avoid claiming amounts without proof.

2. Section 80D: Health Insurance Premiums And Eligible Medical Spend

Section 80D covers health insurance premiums and specified medical-related spends (subject to conditions). This deduction is frequently under-claimed simply because premium receipts are not consolidated before March.

3. Section 80E: Education Loan Interest (Not Principal)

Section 80E allows deduction for interest paid on an education loan taken from a financial institution or an approved charitable institution for higher education, subject to the section’s conditions. Maintain the lender/loan details and interest certificate for reporting.

4. Section 80G: Donations (Payment Mode Matters)

If a donation exceeds ₹2,000, it must not be in cash for deduction eligibility. Keep the donation receipt and proof of payment mode for filing.

5. Section 80GG: Rent Deduction When HRA Is Not Received

If you do not receive HRA and meet conditions, Section 80GG can be relevant. This typically involves an electronic declaration (Form 10BA) and eligibility conditions such as not owning a residential property at the place of work/residence.

6. NPS Deductions: 80CCD(1B) And 80CCD(2)

For taxpayers using NPS, 80CCD(1B) provides an additional deduction route (subject to conditions). 80CCD(2) relates to employer contribution and remains strategically important even when the new regime is chosen (subject to applicable rules).

Can Home Loan Interest Under Section 24(b) Be Claimed?

Under the new regime, housing loan interest under Section 24(b) for a self-occupied property is generally not available while computing income under 115BAC. That said, you can claim interest deduction under Section 24(b) for a let-out property.

What Should Salaried Taxpayers Prioritise Before Payroll Cut-Offs?

A practical March checklist for salaried employees:

• Know your Income Tax regime and consult a tax expert to understand your obligations
• Submit proofs on time (as per employer timeline), not just by March 31.
• Consolidate receipts for the deductions you plan to claim (for example 80C, 80D, 80E, 80G).

Even if payroll does not consider a valid deduction, it can still be claimed while filing Income Tax Return, provided it is eligible and properly documented.

What Should Self-Employed Taxpayers Prioritise Before Year-End?

For self-employed individuals, March planning is less about “buying deductions” and more about tax payment discipline plus regime compliance.

1. Advance Tax Discipline

Advance tax instalments and interest provisions make timely estimation and payment important. Shortfalls can trigger interest consequences.

2. Regime Switching And Form 10-IEA

• If you have business/profession income, Form 10-IEA is used to opt out or re-enter the new regime (as applicable).
• For business/profession taxpayers, regime switching can be restricted compared to taxpayers without business income; ensure the selection aligns with your longer-term plan.

This is a compliance point worth stating clearly because it affects long-term planning and prevents accidental wrong selection.

Common Mistakes To Avoid In The Last Week Of March

• Making 80C investments without confirming regime choice (many deductions are effectively unusable in the new regime).
• Claiming 24(b) interest while filing under the new regime for a self-occupied property.
• Donating in cash above ₹2,000 and expecting an 80G deduction.
• Leaving higher education-loan interest (80E) unclaimed despite having valid interest certificates and lender details.
• For business income cases, selecting the old regime without completing the Form 10-IEA requirement where applicable.