--- title: "Tax Planning for FY 2025–26" url: https://cacpa.in/tax-planning-fy-2025-26/ date: 2026-03-17 modified: 2026-03-31 author: "Author" --- # Tax Planning for FY 2025–26 Tax planning is a structured financial strategy, not a last-minute compliance exercise. With the new tax regime default and evolving positions across Income-tax Act provisions, proactive planning yields cashflow predictability, lower effective tax, and stronger defence in assessments. This guide explains: - Regime Advisory under Section 115BAC — Comparative Modelling - Advance Tax Planning & Cashflow Synchronisation - MAT / AMT & Credit Utilisation - HUF Structuring — When to consider - Income Splitting — Practical guardrails - Capital Gains Structuring & Tax-Harvesting - Section 43B, TDS & Disallowance Controls - House Property Optimisation - Litigation Risk & Defensive Documentation - Strategic Timeline - How C P Agrawal & Associates can help - Frequently Asked Questions (Tax Planning FY 2025–26) ## 1. Regime Advisory under Section 115BAC — comparative modelling (must do) ✔️ **What changed:** The new tax regime under Section 115BAC is now the *default* for eligible individuals/HUF/AOPs — taxpayers still retain the option to choose the old regime after careful analysis. Documented comparative modelling is essential before you elect any regime. **What we do (deliverable):** - Side-by-side computation (current FY + 3-year projection) under old vs new regimes, including surcharge, marginal relief and employer NPS impacts. - Sensitivity rows for major events: large capital gains, ESOP exercise, sale of business or one-off income. - One-page regime recommendation with signed working papers to retain in your tax file. **Quick tip:** Re-run the comparison on any material event — don’t wait until March. ## 2. Advance Tax Planning & Cashflow Synchronisation 💸 **Goal:** avoid interest under Sections 234B/234C by realistic quarterly provisioning and reconcile turnover early. **Checklist:** - Project taxable income and map instalments (June/Sept/Dec/Mar). - Monthly GST ↔ IT reconciliation to keep projections accurate. - Calendarised payments and a March cash reserve for the 4th instalment. - Consider timing of deductible payments — but obey Section 43B payment rules (deductions allowed on payment). **Deliverable:** Advance-tax calendar + monthly cash buffer recommendation. ## 3. MAT / AMT & credit utilisation — plan the sequence 🔁 **Actions:** - Maintain a MAT credit register (generation year, carry forward, expiry). MAT credit can be carried forward and set off subject to statutory rules — monitor utilization years. - If company expects normal tax > MAT in future years, plan utilisation to avoid unnecessary book-tax volatility. - Prepare a memo showing optimal year-by-year utilisation and deferred tax impact. ## 4. HUF structuring — a low-cost planning vehicle (when suitable) **Benefits:** Separate PAN and an additional basic exemption slab for family investments / rental income.**Musts:** Proper deed, genuine contribution/ownership, contemporaneous minutes to avoid “sham” allegations. ## 5. Income splitting — practical guardrails **Strategy:** Shift passive incomes to family members in lower tax slabs (parents, HUF) where lawful.**Caveats:** Avoid artificial transfers that trigger clubbing; maintain commercial substance and documentation. ## 6. Capital Gains Structuring, Tax-Harvesting & Transaction Planning 📉📈 **Why it matters:** Realising gains/losses in the right FY can materially lower tax. The LTCG exemption threshold (on listed equity/equity funds) and rates changed recently — plan around the ₹1.25 lakh exemption and applicable rates when deciding harvests. **Tactical playbook:** - **Tax-loss harvesting:** Identify underperformers and book losses within the FY to offset gains. Losses carry forward up to 8 assessment years if the return is filed on time. - **Use the ₹1.25 lakh LTCG exemption** by carefully timing partial disposals (especially in volatile markets). - **Pre-transaction memo** for high value deals covering: holding period, STT/Section 112A/50/112 implications, deemed consideration rules, GAAR risk & valuation exposure. - **Deliverable:** One-page tax memo per high-value sale showing post-tax proceeds and alternatives. **Note:** Avoid wash-sale style behaviour that could defeat the tax intent — keep continuity records and consider market costs (STT, exit loads). ## 7. Section 43B, TDS & Disallowance Controls — stop leaks 🔍 **Core:** Certain deductions are allowed only on actual payment under Section 43B — plan payments like PF, ESI, TDS deposits and employer contributions accordingly. **Controls to implement:** - Monthly reconciliation: vendor ledger ↔ Form 26AS ↔ TDS challans. - 43B watchlist and auto-reminders for statutory payments. - Quarterly internal TDS audit and vendor compliance checks. - Keep evidence (bank vouchers, challans) in a searchable folder for assessment. ## 8. House property optimisation 🏠 **Common plays:** - Structure co-ownership and loan allocation to maximise interest deduction. - For let-out property, evaluate presumptive vs actual results and timing of sale for capital gains. - Use carry-forward rules for house-property losses where allowed. ## 9. Litigation risk & defensive documentation — be faceless-ready **Practical items:** - Contemporaneous working papers for related party and unusual transactions. - A “Representation Pack” for faceless notices: summary, reconciliations, bank proofs, board minutes and signed declarations. - For transfer pricing / cross-border: keep contemporaneous files and justify arm’s length pricing. ## Strategic timeline — what to do and when - **Q1 (Apr–Jun):** Regime comparison, Q1 diagnostic, advance tax roadmap. - **Q2 (Jul–Sept):** GST vs IT reconciliation; review material events. - **Q3 (Oct–Dec):** MAT/AMT diagnostic; tax-harvest shortlist prepared. - **Q4 (Jan–Mar):** Execute harvesting, finalize 43B payments, check advance tax 4th instalment. ## How C P Agrawal & Associates can help We provide structured, document-first tax planning: regime reports, advance-tax calendars, MAT/AMT optimisation, capital gains memos, 43B/TDS health checks and litigation-ready packs. Ask for the Q1 Tax Diagnostic & Excel templates. 🚗 **[Get Directions on Google Maps](https://maps.app.goo.gl/TzkdzAFnGJKXduNN7) **🌐 **[Explore Our Website](https://cacpa.in/)**📞 **Call us now at +91 9311221571** ## Frequently Asked Questions (Tax Planning FY 2025–26) [Is the new tax regime mandatory now?](#collapse-164709669cb98cf4190b) No — the new regime is the *default* for eligible taxpayers but you can opt for the old regime after a documented comparison.   [What is the LTCG exemption threshold on listed equity?](#collapse-79478a369cb98cf4190b) An exemption of ₹1.25 lakh applies to long-term capital gains on listed equity/equity-oriented funds; gains above that are taxable under Section 112A at applicable rates. [How can I avoid interest under Sections 234B/234C?](#collapse-076686d69cb98cf4190b) Pay realistic advance tax instalments on time and keep a March buffer to meet the 4th instalment. [How long can I carry forward capital-losses?](#collapse-6d7661b69cb98cf4190b) Capital losses can be carried forward subject to the Income-tax Act rules — short-term and long-term loss set-off rules differ; losses must be reported on time and returns filed to preserve carry-forward. [How long can MAT credit be carried forward?](#collapse-587893769cb98cf4190b) MAT credit can be carried forward and is available to set off in subsequent years subject to statutory timelines — maintain a MAT credit register and plan utilisation.