A common myth is that the new regime ends tax planning. It does narrow the toolkit — most exemptions are gone — but a handful of powerful levers remain, and planning shifts from “where do I invest to save tax” to “which regime, which deductions still apply, and how do I manage capital gains.” Here is how to plan for FY 2026-27.
| Quick answer | Key point |
|---|---|
| Does planning still matter? | Yes — fewer levers, but they count. |
| Biggest surviving deduction | Employer NPS contribution under 80CCD(2) — up to 14% of basic for the new regime. |
| Also available | Rs. 75,000 standard deduction, family-pension deduction, Agniveer Corpus (80CCH), let-out home-loan interest. |
| Not available | 80C, 80D, HRA, and self-contribution NPS (80CCD(1)/(1B)). |
| Beyond deductions | Capital-gains harvesting within the Rs. 1.25 lakh LTCG exemption, and choosing the right regime each year. |
Which deductions survive in the new regime?
The new regime trades most deductions for lower rates, but a short, valuable list remains:
- Standard deduction of Rs. 75,000 for salaried and pensioners — automatic, no investment needed.
- Employer NPS contribution under Section 80CCD(2) — deductible up to 14% of basic salary in the new regime, for both government and private employees.
- Family-pension deduction — the lower of one-third of the pension or Rs. 25,000.
- Agniveer Corpus Fund (Section 80CCH).
- Home-loan interest under Section 24(b) on a let-out property.
Gone in the new regime: 80C (PPF, ELSS, life insurance), 80D (health insurance), HRA, and self-contribution NPS under 80CCD(1) and 80CCD(1B).
The biggest lever: employer NPS (80CCD(2))
If you want to reduce tax inside the new regime, the single most effective move is employer NPS. A contribution routed through your employer under Section 80CCD(2) — up to 14% of basic salary — is fully deductible even in the new regime, unlike your own NPS contributions. Many employers offer a “corporate NPS” structure that lets you redirect part of CTC into this deduction.
Under the Income-tax Act, 2025, Section 80CCD is renumbered Section 124, but the rules and limits are unchanged for Tax Year 2026-27.
Beyond deductions: capital-gains harvesting
Planning is not only about salary. Long-term capital gains on listed shares and equity mutual funds up to Rs. 1.25 lakh a year are exempt. “Tax harvesting” means booking gains within that exemption each year — selling and (if you wish) repurchasing — so you reset your cost base and use the free exemption rather than letting gains pile up into a larger taxable amount later.
Remember the rates that apply beyond the exemption: 12.5% on long-term and 20% on short-term listed-equity gains. And note that the Section 87A rebate does not cover this special-rate income.
Choose the right regime — every year for the salaried
The new regime is the default, but you can still pick the old one if your deductions are large. The switching rules differ:
- Salaried (no business income): you can switch between regimes every year while filing.
- Business or professional income: you can switch only once back to the new regime, after which the old regime is closed; opting old requires filing Form 10-IEA before the due date.
Practical rule: if your HRA, home-loan interest and 80C/80D together are large (roughly above Rs. 4 lakh), test the old regime; otherwise the new regime usually wins.
The Rs. 12 lakh rebate cliff to watch
The Section 87A rebate makes income up to Rs. 12 lakh tax-free in the new regime (Rs. 12.75 lakh for salaried after the standard deduction). The rebate disappears once income crosses Rs. 12 lakh, with marginal relief cushioning the immediate jump. If you are close to the threshold, an employer-NPS contribution can be the difference between a full rebate and a tax bill.
Timing: plan through the year, not in March
- Estimate income early and set the employer-NPS contribution in advance — it cannot be backfilled at year-end like an 80C investment.
- Harvest capital gains across the year, not in one rushed March trade.
- Pay advance tax on time to avoid 234B/234C interest.
- File on time — a late return can lock you into the new regime and forfeit loss carry-forward.
How planning fits the bigger picture
Tax planning in the new regime works through three doors: the surviving deductions (chiefly employer NPS), capital-gains management within the Rs. 1.25 lakh exemption, and the annual regime choice. Built on the new-regime slabs and the Section 87A rebate, the goal is no longer chasing every 80C instrument but using a few high-impact levers well. For the slab mechanics, see our guide at /blog/new-tax-regime-fy-2026-27.
Key takeaways
- Planning still matters in the new regime — the levers are fewer but effective.
- Employer NPS (80CCD(2), up to 14% of basic) is the biggest surviving deduction.
- Use the Rs. 1.25 lakh LTCG exemption through capital-gains harvesting.
- Salaried can switch regimes yearly; business income gets only one switch back.
- Plan through the year and watch the Rs. 12 lakh rebate cliff.
Frequently asked questions
Does tax planning still matter in the new regime? Yes. The toolkit is smaller, but the surviving deductions, capital-gains harvesting and the annual regime choice still meaningfully reduce tax.
Which deductions are available in the new regime? The Rs. 75,000 standard deduction, employer NPS under 80CCD(2), the family-pension deduction, Agniveer Corpus (80CCH), and let-out home-loan interest under Section 24(b).
Is NPS still worth it under the new regime? Employer NPS under Section 80CCD(2) (up to 14% of basic) remains deductible and is the most effective lever. Self-contributions under 80CCD(1)/(1B) are not deductible in the new regime.
What is capital-gains tax harvesting? Booking long-term gains on listed equity within the Rs. 1.25 lakh annual exemption to use the free exemption and reset your cost base, rather than letting gains accumulate into a larger taxable amount.
Can I switch between the old and new regime? Salaried taxpayers without business income can switch every year while filing. Those with business income can switch back to the new regime only once, after which the old regime is closed.
When should I do my tax planning? Through the year, not in March. Employer NPS must be set in advance, gains harvested across the year, and advance tax paid on time.
New regime me tax kaise bachaaye? Mukhya tareeka employer NPS (80CCD(2), basic ka 14% tak) hai, saath hi Rs. 1.25 lakh tak LTCG exemption ka istemaal aur har saal sahi regime chunna.
Does the 87A rebate help in planning? Yes. It makes income up to Rs. 12 lakh tax-free, but disappears above that. Near the threshold, an employer-NPS contribution can preserve the full rebate.
Want a plan built around your numbers?
The right mix of employer NPS, regime choice and gains harvesting depends entirely on your salary structure and portfolio. Regikart’s CA & CS team can model it for you. Reach us at +91 70444 94804 or [email protected], or see our income tax services at /income-tax-services.
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CA & CS Team
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