Last-Minute Tax Saving Before March 31: Complete Guide for FY 2025-26
March 31 is approaching fast. If you haven't completed your tax-saving investments yet, don't panic - you still have time. This guide covers everything you need to know to reduce your tax liability before the deadline.
Critical: Most tax deductions are available ONLY under the Old Tax Regime. If you're on the New Regime, most of these won't apply. Check your regime before investing.
What's Covered
1. First Things First: Old vs New Regime
Before you invest a single rupee, you need to know which tax regime you're on. This matters because most deductions don't work under the New Regime.
| Feature | Old Regime | New Regime |
|---|---|---|
| Section 80C (PPF, ELSS, etc.) | Yes - Rs 1.5L | No |
| Section 80D (Health Insurance) | Yes - Rs 25K-1L | No |
| HRA Exemption | Yes | No |
| Home Loan Interest (Self-occupied) | Yes - Rs 2L | No |
| NPS Employer Contribution (80CCD2) | Yes - 14% | Yes - 14% |
| Standard Deduction | Rs 50,000 | Rs 75,000 |
How to check your regime: Look at your Form 16 from your employer, or check the tax declaration you submitted at the start of the year. If you haven't declared, the default is New Regime from FY 2023-24 onwards.
If you're on the Old Regime or planning to switch - read on. If you're staying on the New Regime, your options are limited to NPS employer contribution and the higher standard deduction.
2. All Deductions at a Glance
Here's a quick reference of every major deduction available:
| Section | Deduction For | Max Limit | Old Regime | New Regime |
|---|---|---|---|---|
| 80C | PPF, ELSS, EPF, LIC, etc. | Rs 1.5 Lakh | Yes | No |
| 80CCD(1B) | NPS (additional) | Rs 50,000 | Yes | No |
| 80CCD(2) | Employer NPS | 14% of salary | Yes | Yes |
| 80D | Health Insurance | Rs 25K - 1L | Yes | No |
| 80E | Education Loan Interest | No limit | Yes | No |
| 80G | Donations | 50-100% | Yes | No |
| 80GG | Rent (no HRA) | Rs 60,000 | Yes | No |
| 80TTA | Savings Interest | Rs 10,000 | Yes | No |
| 80TTB | Interest (Seniors) | Rs 50,000 | Yes | No |
| 24(b) | Home Loan Interest | Rs 2 Lakh | Yes | No* |
*Let-out property interest is allowed under new regime too
3. Section 80C - The Big One (Rs 1.5 Lakh)
Section 80C is the most popular tax-saving section. You can claim deductions up to Rs 1.5 lakh per year on various investments and expenses.
Step 1: Check What's Already Used
Before making new investments, calculate how much of your Rs 1.5 lakh limit is already used:
- EPF deduction - Check your payslip (12% of basic goes to EPF)
- Life insurance premiums - Policies you've already paid for
- Children's tuition fees - School fees already paid
- PPF contributions - Any deposits made this year
- Home loan principal - EMI principal component
Example: If your monthly EPF deduction is Rs 5,000, you've already used Rs 60,000 of your 80C limit (5,000 x 12). You only need to invest Rs 90,000 more to max out the limit.
Step 2: Choose Where to Invest
Here's a comparison of popular 80C investment options:
| Option | Lock-in | Returns | Risk | Best For |
|---|---|---|---|---|
| ELSS Mutual Funds | 3 years | 12-15% | High | Young investors, wealth creation |
| PPF | 15 years | 7.1% | Zero | Safe, long-term, tax-free returns |
| Tax-Saving FD | 5 years | 6.5-7% | Zero | Quick, safe, last-minute |
| NSC | 5 years | 7.7% | Zero | Post office investors |
| SCSS | 5 years | 8.2% | Zero | Senior citizens only |
| Life Insurance | Varies | 4-6% | Low | Insurance + tax saving |
My Recommendation by Age
Don't buy insurance just for tax saving. If you need life insurance, buy term insurance (it's cheap and gives high coverage). Don't buy endowment or money-back policies just to save tax - they give poor returns.
4. Section 80CCD(1B) - Extra Rs 50,000 via NPS
This is one of the most overlooked deductions. You can invest up to Rs 50,000 in NPS (National Pension System) and claim deduction over and above the Rs 1.5 lakh 80C limit.
Total potential: 80C (Rs 1.5L) + 80CCD(1B) (Rs 50K) = Rs 2 lakh deduction just from these two sections!
How to Invest in NPS Quickly
- Visit eNPS portal
- Register with Aadhaar or PAN
- Choose your pension fund and investment mix
- Make payment online (UPI/Net Banking)
- Done! You'll get a PRAN (Permanent Retirement Account Number)
The entire process takes about 15-20 minutes online.
Note: NPS has a lock-in until age 60. At retirement, you must use 40% to buy an annuity (pension). The remaining 60% can be withdrawn tax-free. It's a retirement product, not a short-term investment.
5. Section 80D - Health Insurance (Rs 25K to Rs 1 Lakh)
Health insurance premiums paid for yourself and family qualify for deduction under Section 80D. This is separate from 80C.
Deduction Limits
| Coverage | Below 60 years | 60+ years (Senior) |
|---|---|---|
| Self + Spouse + Children | Rs 25,000 | Rs 50,000 |
| Parents | Rs 25,000 | Rs 50,000 |
| Maximum Total | Rs 50,000 | Rs 1,00,000 |
What Qualifies Under 80D
- Health insurance premiums - For self, spouse, children, parents
- Preventive health check-up - Up to Rs 5,000 (within overall limit)
- Medical expenses for uninsured senior citizen parents - Up to Rs 50,000
Last-minute tip: If your parents aren't covered by health insurance, buy a policy for them now. You get tax benefit AND they get health coverage. Win-win.
Calculate Your HRA Exemption
Use our HRA Calculator to find out how much rent exemption you can claim
Open HRA Calculator6. Section 80G - Donations (Often Overlooked)
Donations to eligible charities and funds qualify for tax deduction. Many people miss this because they don't realize their donations are tax-deductible.
100% Deduction (No Limit)
- Prime Minister's National Relief Fund
- National Defence Fund
- PM CARES Fund
- Chief Minister's Relief Fund
50% Deduction (10% of Income Limit)
- Most registered NGOs and charities
- Local charitable organizations with 80G registration
Important rules:
1. Cash donations above Rs 2,000 are NOT eligible - use UPI/bank transfer
2. Get a receipt with the NGO's 80G registration number and PAN
3. In-kind donations (food, clothes) don't qualify
7. Other Useful Deductions
Section 80E - Education Loan Interest (No Limit!)
If you've taken an education loan for yourself, spouse, or children, the entire interest paid is deductible. There's no maximum limit.
- Only interest portion - not principal
- Loan must be from bank or financial institution (not relatives)
- Available for 8 years from start of repayment
- Higher education only (after Class 12)
Section 80GG - Rent Without HRA (Rs 60,000)
If you pay rent but don't receive HRA from your employer (common for self-employed people), you can claim deduction under 80GG.
Deduction is the lowest of:
- Rs 5,000 per month (Rs 60,000/year)
- Rent paid minus 10% of total income
- 25% of total income
You need to file Form 10BA with your ITR to claim this.
Section 80TTA - Savings Account Interest (Rs 10,000)
Interest earned on your savings accounts (up to Rs 10,000) is deductible. This is automatic - you just need to report it correctly in your ITR.
Section 80TTB - For Senior Citizens (Rs 50,000)
Senior citizens (60+) get a higher deduction of Rs 50,000 on interest from savings accounts, FDs, and RDs combined.
Sections 80DD, 80DDB, 80U - Disability & Medical
| Section | For | Deduction |
|---|---|---|
| 80DD | Disabled dependent | Rs 75K (40-80% disability) / Rs 1.25L (80%+) |
| 80U | Self-disability | Rs 75K / Rs 1.25L |
| 80DDB | Medical treatment (specified diseases) | Rs 40K (below 60) / Rs 1L (60+) |
8. Home Loan Tax Benefits
If you have a home loan, you can claim deductions on both interest and principal.
Section 24(b) - Interest Deduction
- Self-occupied property: Up to Rs 2 lakh per year
- Let-out property: No limit (but losses capped at Rs 2 lakh for set-off)
- Pre-construction interest can be claimed in 5 equal installments after possession
Section 80C - Principal Repayment
- Part of the Rs 1.5 lakh overall 80C limit
- Stamp duty and registration charges also eligible (in year of payment)
Joint home loan tip: If you and your spouse are co-borrowers AND co-owners, each can claim up to Rs 2 lakh interest deduction separately. Double the benefit!
9. Common Mistakes to Avoid
1. Waiting until March 31
Websites crash, transactions fail, and you miss the deadline. Invest at least a week before.
2. Forgetting existing 80C usage
EPF, tuition fees, insurance premiums - these already count. Calculate your remaining limit first.
3. Buying wrong products for tax saving
Don't buy expensive insurance policies just to save tax. ELSS or PPF are better options.
4. Cash donations above Rs 2,000
They don't qualify for 80G deduction. Always use digital payments.
5. Not keeping documentation
Keep all receipts, statements, and certificates. You'll need them while filing ITR.
6. Being on New Regime
Most deductions don't apply! Verify your regime before investing.
10. Action Checklist
Before March 31, Make Sure You've:
- Verified your tax regime (Old vs New)
- Calculated existing 80C usage (EPF, insurance, etc.)
- Invested remaining 80C amount (ELSS/PPF/FD)
- Considered NPS for extra Rs 50K deduction
- Paid health insurance premium (self + parents)
- Collected donation receipts with 80G details
- Organized all investment proofs
- Submitted investment declaration to employer (if time permits)
11. Frequently Asked Questions
What is the last date for tax-saving investments?
March 31 is the last date for any financial year. For FY 2025-26, invest before March 31, 2026.
Can I save tax under the new regime?
Very limited options. Only employer NPS contribution (80CCD2) and standard deduction of Rs 75,000 are allowed. Most deductions like 80C, 80D, HRA don't apply.
Which is better - ELSS or PPF?
ELSS: Shorter lock-in (3 years), higher potential returns (12-15%), but with market risk. PPF: Guaranteed returns (7.1%), zero risk, 15-year lock-in. Young investors can prefer ELSS; conservative investors should choose PPF.
Is NPS contribution over and above 80C?
Yes! Section 80CCD(1B) gives you Rs 50,000 additional deduction over the Rs 1.5 lakh 80C limit. Total potential = Rs 2 lakh.
Can I claim both HRA and 80GG?
No. If you receive HRA, claim HRA exemption. If you don't receive HRA, claim 80GG. You cannot claim both.
What happens if I miss the March 31 deadline?
The investment counts for the next financial year. You cannot claim it for the current year. There's no extension.
Can I pay rent to parents and claim tax benefit?
Yes, but you need: rent agreement, bank transfer proof, rent receipts, and your parents must show rental income in their ITR.
Calculate Your Tax
Use our Income Tax Calculator to compare Old vs New regime and see your tax liability
Open Tax CalculatorSummary
The March 31 deadline is real. Don't leave your tax planning to the last day. Here's what matters most:
- Check your regime - Old regime gets deductions, New regime mostly doesn't
- Max out 80C (Rs 1.5L) - ELSS, PPF, or Tax-Saving FD
- Consider NPS (Rs 50K extra) - Additional deduction over 80C
- Don't forget 80D - Health insurance for self and parents
- Keep all proofs - You'll need them for ITR filing
Start today. Your future self will thank you.