Summary of this article
As March 31 approaches, the instinct to act is natural. But better outcomes come from slowing down.
If you choose the Old Tax Regime, don't assume you have a Rs 1.5 lakh gap to fill. EPF contributions, life insurance premiums, and home loan principal repayments often quietly exhaust this limit during the year.
The challenge arises when a product is chosen for tax benefits alone, without considering your time horizon. A rushed decision today can become a liquidity constraint for a decade.
The last week of March often feels less like planning and more like panic. As the financial year draws to a close, people often realise they haven’t done any tax planning. A quick call to the chartered accountant (CA) usually comes with one clear instruction: “Exhaust your Section 80C limit of Rs 1.50 lakh.” What usually happens is that people invest in products they barely understand: a high-premium insurance policy and a tax-saving fixed deposit (FD), which seems reasonable and gives a sense of feeling responsible, too, though in reality it is often an act in haste.
Later during the year, people often discover the usual: The Employees’ Provident Fund (EPF) and home loan principal already cover the 80C limit. More importantly, if one is in the new tax regime (NTR), where 80C deductions don't exist, the Rs 1.50 lakh investment done in haste doesn’t reduce the tax liability by a single rupee.
From Panic to Awareness
For many, March is a race to finish deductions rather than understand them. This leads to misaligned investments and locked-in capital.
Says Sanjiv Bajaj, joint chairman and managing director, Bajaj Capital: “Tax planning should be a by-product of financial planning. When decisions are rushed, they solve for compliance, not for long-term wealth.”
Mistake 1: Ignoring The "Zero-Tax" Threshold
The biggest mistake in 2026 is missing the new math. Under the NTR, if your taxable income is up to Rs 12 lakh, your tax is nil due to the Section 87A rebate (up to Rs 60,000). For salaried individuals, adding the Rs 75,000 standard deduction means you can earn up to Rs 12.75 lakh and pay nil tax without investing a single paisa in tax-saving schemes.
Mistake 2: Not knowing your “Real” 80C Position
If you choose the old tax regime (OTR), don’t assume you have a Rs 1.50 lakh gap to fill. EPF contributions, life insurance premiums, and home loan principal repayments often quietly exhaust this limit during the year.
The Tip: Calculate your existing “passive” deductions first. Your gap might only be Rs 5,000, not Rs 1.50 lakh.
Mistake 3: The "Regime" Confusion
NTR is now the default regime. If you didn’t specifically opt for the OTR with your employer, your 80C investments, such as Public Provident Fund (PPF), equity-linked savings schemes (ELSS), as well as premiums towards life insurance policies, along with health insurance premiums (Section 80D) won’t lower your tax burden.
The NTR offers lower rates, higher standard deduction (Rs 75,000), but no benefits under Section 80C/80D. The OTR has higher tax rates, but allows all traditional deductions.
Mistake 4: Choosing Products For Wrong Reasons
Urgency often leads to poor liquidity choices and this is especially true for March. ELSS has a 3-year lock-in, while PPF locks your money for 15 years. “The challenge arises when a product is chosen for tax benefits alone, without considering your time horizon,” Bajaj adds. A rushed decision today can become a liquidity constraint for a decade.
Mistake 5: Ignoring "Other" Advantages (Old Regime Only)
Though Section 80C often steals the show, several deductions are frequently overlooked.
Under Section 80D, you can claim up to Rs 25,000 for health insurance premiums for self and family, and an additional Rs 50,000 towards health premiums for your senior citizen parents. Under Section 80CCD 1B, you can claim an extra deduction of Rs 50,000 for investment in the National Pension System (NPS), in addition to the Section 80C limit.
However, it’s important to note that in NTR, the sole NPS benefit is the employer's contribution, which can be up to 14 per cent of your salary.
Mistake 6: Missing The Paperwork Trail
Even correct investments fail if you miss the documentation. Ensure you have your interest certificates (from banks) and home loan statements ready. Also, if your non-salary income (like FD interest or capital gains) puts your tax liability over Rs 10,000, ensure you have paid your Advance Tax to avoid interest penalties under Section 234B/C.
The Bottom Line: As March 31 approaches, the instinct to act is natural. But better outcomes come from slowing down. Check what you have already done. Confirm which regime you are in. Fill only the real gaps. The biggest tax mistake isn't missing a deduction, it’s making an investment you never needed to make.
