Tax Planning for Salaried Employees in India: Month-by-Month Playbook for FY 2025-26

Most salaried taxpayers in India wake up to tax planning in February or March – and then rush to invest in whatever their colleague suggests, without a clear plan. This often leads to wrong products, liquidity problems, and avoidable stress. In this guide, I’ll walk you through a month-by-month playbook so that tax planning becomes a calm, predictable process rather than a last-minute scramble.

We’ll focus on practical actions you can take each quarter – aligning your salary structure, using the right deductions (80C, 80D, NPS, home loan interest, HRA), and deciding between old and new tax regimes in a data-driven way.

April–June: Set the Foundation for the Year

1. Understand Your Salary Structure

Start by carefully reading:

• Your salary breakup / CTC sheet
• Your latest payslip

Identify:

• Basic salary, HRA, special allowance
• Any performance-linked components
• Employer contributions to EPF, NPS, or other benefits

This tells you:

• How much flexibility you have (e.g., can you adjust HRA or certain allowances?)
• How much is already being contributed to tax-efficient instruments (EPF, NPS)

2. Choose a Tentative Tax Regime (Old vs New)

Using estimates:

• List your expected deductions for the year:
• EPF employee contribution
• PPF / ELSS / home loan principal / tuition fees (80C)
• Health insurance (80D)
• Home loan interest (Section 24)
• Any NPS contributions (80CCD)

• Use our Old vs New Tax Regime Calculator to compare:
• Old regime tax vs new regime tax, based on realistic deductions

At this stage, you just need a tentative choice. You can refine it later when actual numbers are known.

3. Start Systematic Investments Early

If you plan to use the old regime:

• Set up monthly SIPs in ELSS or other 80C-eligible instruments instead of lump-sum in March
• Align your PPF deposits or other investments with your monthly cash flow

Even if you ultimately choose the new regime, many of these investments (EPF, health insurance, basic PPF) are still valuable beyond tax benefits.

July–September: Fine-Tune and Review

By this time, you’ll usually have:

• First half-year’s salary slips
• A good sense of variable pay (if applicable)
• Better visibility of actual expenses and investments

4. Review Form 16 (Part A Projections)

If your employer provides mid-year tax projections:

• Check how they are estimating your taxable income
• Verify that declared 80C/80D/NPS contributions are correctly captured
• Confirm that HRA, LTA, and other exemptions are being applied correctly if you’re in the old regime

If you see a big projected tax liability:

• Consider upping your SIPs or recurring PPF deposits
• Evaluate additional NPS contribution (especially if you’re in the higher tax bracket)

5. Reconfirm Your Regime Choice

Run updated numbers through the Income Tax Calculator:

• Scenario A: Old regime with your current and planned deductions
• Scenario B: New regime with minimal deductions

If the difference is small, you might choose simplicity (new regime). If the old regime clearly wins (because you’re effectively using deductions), commit to it and plan the rest of your year accordingly.

October–December: Course-Correct, Don’t Panic

Many people suddenly realize around November that they’re behind on investments. Instead of panicking:

6. Compare “Planned vs Actual” Deductions

For the old regime, check:

• 80C: How much of the ₹1.5 lakh limit have you actually used so far?
• 80D: Have you paid health insurance premiums yet?
• Section 24: Is home loan interest on track to reach the maximum limit?
• Any charitable donations or other planned deductions?

If there’s a gap:

• Decide whether it’s realistic – and desirable – to fill it through meaningful investments (not just tax-saving for the sake of it)

7. Optimize HRA, Rent, and Declarations

If you receive HRA:

• Ensure rent receipts and agreements are in place
• If you’re staying with parents and paying them rent, make sure you’re doing it correctly (agreement, bank transfers, and proper reporting in their returns)

This is also the time to:

• Update rent declarations with HR if your rent has changed
• Correct any obvious mistakes in earlier declarations

January–March: Execute the Remaining Plan (Without Overdoing It)

8. Fill Any Remaining Gaps Intelligently

If you’re still under the 80C limit:

• Prioritize instruments that:
• Align with your goals (e.g., retirement via PPF, ELSS)
• Have reasonable liquidity and transparency
• Avoid locking too much into products you don’t understand (like complex traditional insurance plans)

For 80D:

• Pay any due health insurance premiums before March 31
• If considering top-up health coverage, this is a good time to decide

9. Avoid Last-Minute Mistakes

Don’t:

• Invest purely to “save tax” in the last week of March without understanding product risk and lock-in
• Ignore liquidity – ensure you have an emergency fund in accessible instruments
• Forget to keep receipts and proofs for all investments and payments

Do:

• Use our Tax Planning Timeline Calculator to visualize and double-check your actions across the year

Year-End Checklist for Salaried Employees

Before March 31, run through this:

• [ ] Have I used 80C to a sensible level (not necessarily full ₹1.5 lakh if it strains cash flow)?
• [ ] Have I paid health insurance premiums for self/family/parents as planned (80D)?
• [ ] Is my employer’s HRA calculation broadly matching my own?
• [ ] Have I considered NPS (80CCD(1B)) if I’m in a higher tax bracket and comfortable with long-term lock-in?
• [ ] Have I kept digital or physical copies of all investment proofs?

Integrating This Playbook with Your Tools

To make this framework actionable:

1. Use the Income Tax Calculator at least twice a year (April/May and December/January)
2. Use the Section 80C Optimizer to choose the right mix of 80C investments
3. Use the Tax Planning Timeline Calculator to map your actions month by month

Final Thoughts

Effective tax planning for salaried employees is not about buying random policies in March. It’s about understanding your salary structure, deciding on a tax regime that truly suits you, and then executing a steady, predictable plan through the year.

Spend a bit of time this April setting up your plan – salary structure, HRA, SIPs, insurance, and tentative regime choice. Then, use this playbook to review quarterly instead of reacting in panic at the end of the year. Over your working life, this calm, methodical approach will save you not only tax, but also a lot of stress.

Disclaimer: Tax laws, slab rates, and deduction rules may change via the Union Budget and subsequent notifications. This playbook is based on provisions for FY 2025–26 as currently understood and is for educational purposes. Always verify the latest rules and consult a qualified tax professional for personalized advice.