What is salary tax planning?

Salary tax planning is legally minimising the income tax on your salary by choosing the right tax regime and structuring your CTC, for example routing pay into tax-free components like employer EPF, employer NPS (80CCD(2)) and meal coupons, or claiming deductions in the old regime.

Is the new tax regime the default in FY 2026-27?

Yes. The new regime is the default; you must actively opt for the old regime if it is cheaper for you. In the new regime, taxable income up to ₹12,00,000 is tax-free (Section 87A) and the standard deduction is ₹75,000.

How can I save tax on my salary?

First pick the cheaper regime for your situation, then structure your CTC. In the new regime, use employer EPF, employer NPS (up to 14% of basic) and meal coupons to lower taxable income toward ₹12,00,000. In the old regime, claim HRA, home-loan interest, 80C (₹1.5L), 80D and 80CCD(1B).

When do I choose my tax regime?

A salaried person can choose the regime each year while filing the return (and usually declares a preference to payroll for TDS). Taxpayers with business income must file Form 10-IEA to opt out of the new regime.

Salary Tax Planning in India (FY 2026-27): The Complete Guide

Updated for FY 2026-27 · illustrative, not financial advice

Salary tax planning means legally paying the least income tax on your salary by (1) choosing the right tax regime and (2) structuring your CTC. In FY 2026-27 (AY 2027-28) the new regime is the default and gives ₹0 tax up to about ₹12.75 lakh; above that, you can still cut tax (often to zero) by routing pay into tax-free components. This guide covers everything, and the freeplanner does the maths for you.

1. Pick the right regime

The new regime wins for most salaried people: higher standard deduction (₹75,000) and ₹0 tax up to ₹12,00,000 taxable. The old regime only wins with large deductions (rent/HRA, home-loan interest, full 80C). ReadOld vs New Tax Regime: which is better? and compare both with your numbers in the planner.

2. How much tax on your salary?

See the exact FY 2026-27 tax (new vs old) for a given salary:

3. Cut tax in the new regime (CTC structuring)

Three tax-free levers lower your taxable income: employer EPF (12% of basic),employer NPS under 80CCD(2) (up to 14% of basic), and meal coupons(up to ~₹1,05,600/yr). Combined employer EPF + NPS + superannuation exempt is capped at ₹7.5L. Learn how to reach ₹0: How to pay zero tax on salaryand Employer NPS (80CCD(2)) explained.

4. Old-regime deductions

If you choose the old regime, these reduce your taxable income:Section 80C (₹1.5L: EPF, PPF, ELSS, LIC, tuition),HRA exemption (rent, Section 10(13A)), home-loan interest (24(b), ₹2L), 80D health insurance, and 80CCD(1B) extra NPS (₹50k).

Key numbers: FY 2026-27 quick reference

	New regime	Old regime
Standard deduction	₹75,000	₹50,000
Zero-tax up to (87A)	₹12,00,000 taxable	₹5,00,000 taxable
Top rate	30% above ₹24L	30% above ₹10L
Employer NPS 80CCD(2)	14% of basic	10% of basic
80C / HRA / home-loan interest	Not available	Available

5. Plan it in 30 seconds

Enter your CTC in the planner: it shows your income tax, take-home and the exact structuring to minimise tax under both regimes, then compares old vs new and lets you continue into a full plan for whichever is cheaper.

Frequently asked questions

What is salary tax planning?: Salary tax planning is legally minimising the income tax on your salary by choosing the right tax regime and structuring your CTC, for example routing pay into tax-free components like employer EPF, employer NPS (80CCD(2)) and meal coupons, or claiming deductions in the old regime.
Is the new tax regime the default in FY 2026-27?: Yes. The new regime is the default; you must actively opt for the old regime if it is cheaper for you. In the new regime, taxable income up to ₹12,00,000 is tax-free (Section 87A) and the standard deduction is ₹75,000.
How can I save tax on my salary?: First pick the cheaper regime for your situation, then structure your CTC. In the new regime, use employer EPF, employer NPS (up to 14% of basic) and meal coupons to lower taxable income toward ₹12,00,000. In the old regime, claim HRA, home-loan interest, 80C (₹1.5L), 80D and 80CCD(1B).
When do I choose my tax regime?: A salaried person can choose the regime each year while filing the return (and usually declares a preference to payroll for TDS). Taxpayers with business income must file Form 10-IEA to opt out of the new regime.