Can't have HRA in salary? No problem: Top tax hacks under New Tax Regime for FY27 explained

FY 2026-27 tax hack: With the new Income Tax regime coming into force from April 1, 2026, salaried employees are entering a fundamentally different tax environment—one where traditional deductions like HRA, 80C, and home loan benefits no longer drive savings. Instead, the focus has shifted to salary structuring, and according to tax expert Ved Jain, this is where the real opportunity lies.

A key strategy under the new regime is to replace House Rent Allowance (HRA) with employer-provided rent-free accommodation. Since HRA exemption is not available, employees living in rented homes can restructure their compensation so that the employer directly leases the property and pays the rent. In such cases, the lease agreement is in the employer’s name, converting what would have been a taxable allowance into a perquisite with more favourable tax treatment. This effectively reduces taxable income without relying on deductions.

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In a PTI video, Ved Jain emphasises that the new tax regime is designed to simplify taxation and, in most cases, increase take-home income. “There are no hidden drawbacks,” he notes, adding that the system removes the need for extensive documentation and investment-linked tax planning. He also believes the old tax regime could be phased out over time, making early adaptation a practical move for salaried professionals.

Perquisites and allowances

Beyond housing, employees can unlock additional efficiencies by optimising perquisites and allowances. For instance, company-provided vehicles for personal and official use are taxed on a fixed valuation basis (depending on engine capacity and driver provision), which is often more tax-efficient than receiving a higher cash salary. Similarly, employers can offer tax-free gifts or festival vouchers up to ₹15,000 per year, which are excluded from taxable income—up from the earlier ₹5,000 limit.

New Tax Regime 2026-27

The new regime also builds in structural relief. A standard deduction of ₹75,000 is available to all salaried individuals, directly reducing taxable income. Additionally, due to rebate provisions, individuals with taxable income up to ₹12 lakh effectively pay zero tax. When combined with the standard deduction, this means gross income up to around ₹12.75 lakh–₹12.9 lakh can result in no tax liability, depending on salary structure.

This marks a clear shift in tax planning philosophy. Under the old regime, savings were driven by investments—EPF, PPF, ELSS, insurance premiums, and housing loans. In contrast, the new regime rewards compensation design over post-income tax-saving behaviour. Employees must now actively engage with their HR teams to restructure salary components in a tax-efficient manner.

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That said, the old regime is not entirely redundant. Taxpayers with significant deductions—such as large Section 80C investments, high insurance premiums, or education loan interest—may still find it beneficial. However, for younger professionals or those without substantial deductions, the new regime, combined with smart structuring, can lead to higher disposable income and lower compliance burden.

In FY 2026-27, the most effective tax hack is not about chasing exemptions but about re-engineering your payslip. As Ved Jain underscores, employees who align their compensation with the new regime’s design—leveraging rent-free accommodation, perquisites, and tax-free benefits—stand to gain the most in this simplified but strategy-driven tax framework.