Video summary

How To Save Lakhs In Taxes In 2026? | Kushal Lodha #358

Main summary

Key takeaways

Finance

Disclaimers

  • The subtitles don’t include an explicit “not financial advice” statement.

Key changes & timelines (Income Tax Act 2025 / 2026)

  • New vs old regime planning shift starts “from 1 April 2026” (tax year concept).
  • Tax year vs financial year/assessment year confusion is reduced:
    • From 1 April 2026, they say the concept of “assessment year” is removed in favor of a simpler “tax year.”
  • Many planning examples are framed as applying under Income Tax Act 2025 effective from April 2026, but ITR filing in July/August for FY 2025–26 is still treated under “old” provisions.

“Zero tax” salary planning (salaried individuals)

A worked example and framework to reduce taxable salary (implying no salary tax) by using deductions and allowances.

Step-style framework (salary)

  • Use deductions via employer contributions
    • EPF (employer contribution): example assumes 12% of basic → ₹94,500
    • NPS (employer contribution): example assumes 14% of basic → ₹11,250
  • Include allowed Food Allowance under the new regime
    • Limit mentioned: ₹15,600/month (stated as a jump from the previous limit)
    • Linked to CTC components and meal vouchers/prepaid cards (examples include Swiggy/Zomato/BigBasket)
  • Standard deduction
    • Stated as ₹75,000 (no change mentioned)
  • Example numbers
    • Gross salary: ₹15,75,000
    • Assumed basic = 50% of gross → ₹7,87,500
    • After EPF + NPS + food allowance + standard deduction, net taxable salary drops below ~₹1 lakh, leading to zero tax

Explicit recommendations/cautions

  • Check whether your company’s salary structure includes the new Food Allowance changes to claim the benefit.
  • Emphasis: employer EPF/NPS contributions reduce taxable salary (the guest claims many people misunderstand this).

Tickers/assets mentioned in this salary context

  • None directly in the salary section.

Professional / freelance income: presumptive taxation under Section 58 (new)

Discussion of simplified presumptive taxation for “notified professionals.”

Step-style framework (professional income)

  • Professional fees are defined as receipts from notified professions (e.g., CA/lawyer/architect/IT consultant/technical consultant, etc.).
  • Under Section 58 (logic compared to 44ADA/earlier scheme):
    • If gross receipts up to ₹24 lakh, presume 50% expenses
    • So 50% treated as income, implying tax can be zero below ~₹12 lakh income equivalent (based on the example logic)
  • They also mention broader extension (as stated in subtitles): benefits can extend beyond ₹24 lakh up to ₹75 lakh turnover, with simplified compliance (ITR-4 mentioned).
  • Key caveat
    • If actual profit exceeds 50% of receipts (i.e., you’re far above presumptive assumptions), you may need more detailed accounts.
  • Grey area mentioned
    • Content creators / AI services / video editors may fall into “notified professional” definitions depending on whether the service fits.

Instruments/tickers

  • No market tickers mentioned here.

Business income: presumptive taxation via Section 58

Step-style framework (business income)

  • For businesses other than commission/agency:
    • Presumptive profits under Section 58:
      • 6% of gross receipts if income is taken digitally
      • 8% if income is partly received in cash (higher percentage for cash)
  • Turnover limits mentioned
    • Up to ₹2 crore (and also ₹3 crore is mentioned elsewhere; subtitles are inconsistent)
  • Exceptions/cautions
    • Agency/commission brokerage businesses (including insurance brokers) are described as excluded from the presumptive benefit
    • Example of “agency-like” models: franchise/distributor/distribution-style businesses (Naturals/ice-cream franchise logic referenced)

Rental income: “House Property” planning (zero tax up to ₹17 lakh)

Key recommendation

  • If the person’s only income is from house property/rent and total rent income is ≤ ₹17 lakh, they claim no tax (due to standard deduction).

Planning examples they mention

  • Rental includes residential + commercial, and also “shop”/shop-renting scenarios.
  • Family split planning (husband–wife)
    • They argue rent/ownership should align with income clubbing rules
    • Misstep example: buying property in one spouse’s name but routing rent in a way that doesn’t match contribution
    • Correct approach: property ownership ratio aligned with capital contribution and documented properly

Cautions

  • Avoid “convenience-name” transfers that may fail scrutiny; they note income-tax scrutiny could challenge the transaction.

HRA + renting to parents (family planning)

Core idea

Employees can claim HRA even if they pay rent to parents, but:

  • There must be a proper legal agreement
  • Rent should be at/near market rate
  • Overstating rent is a legal risk

HRA formula mentioned (conceptually: “least of”)

  1. Actual rent paid minus 10% of salary
  2. 50% of salary (basic-related context)
  3. HRA received from employer

Example numbers (as given)

  • The example references ₹17 lakh rent paid to father and discusses the idea that the parent may have zero tax while the child gets HRA-based deductions.
  • Market-rate caution: “don’t inflate; avoid black area of law.”

Leverage / Home loan interest deductions: which regime benefits and drawbacks

Key recommendation (tax logic)

  • Using leverage (home loan) can reduce taxable house property income via interest deduction, especially when:
    • The property is rented out
    • The borrower has taxable rental income

Interest deduction limits (as described)

  • Old regime: mentions a ₹2 lakh limit in a self-occupied scenario (references are mixed in subtitles).
  • New regime: self-occupied interest benefits may not be available, but for rented property, they state full interest deduction can still be claimed (subtitles vary; “no limit” wording appears for the rental + loan situation).

Explicit interest/loan example mentioned

  • Example interest rate: 8%
  • Loan principal examples: less than ₹1 crore (mentioned in passing)

Drawbacks highlighted

  • Opportunity cost: if you can earn higher returns elsewhere, loan interest may reduce net benefit.
  • Complexity: they suggest “business-like” thinking—borrow only if you can manage assets and repayment.

Instruments mentioned

  • Not specific tickers; discussion includes using mutual fund/equity assets as offsets.

Capital gains simplification & tax rates (equity-focused)

A “memory table” approach for long vs short term capital gains.

Step-style framework (capital gains)

  • 1) Classify holding period
    • Long-term (LT) vs Short-term (ST)
    • Emphasized LT thresholds:
      • For equity shares / equity mutual funds / listed instruments: LT if > 12 months
      • For unlisted equity / some instruments: often longer (subtitles mention >24 months, though wording is messy)
    • They also claim in simplified framing that many categories (gold, gold funds, international funds, etc.) become short-term (subtitles inconsistent).
  • 2) Apply tax rates
    • LTCG: 12.5% flat (they say “nothing to remember”)
    • Exemption for listed equity / equity MF-related LTCG
      • 12.5% with exemption up to ₹1.25 lakh (they repeatedly state ₹1.25 lakh)
    • STCG
      • Taxed at your applicable slab rate
      • They mention “slab rate accepted”; subtitles mention 20% discount logic inconsistently, but the takeaway is STCG is slab-based in their summary

Instruments mentioned (equity/capital gains context)

  • Equity shares, equity mutual funds, ETFs
  • InvITs / REITs
  • Bonds / SGB / unlisted securities
  • Gold / gold funds
  • International funds
  • Unlisted bonds
  • Example international holdings: Nvidia, Tesla
  • Crypto (Bitcoin)

Crypto tax claim (highly explicit)

  • Crypto treated as speculative:
    • 30% tax on profit
    • No set-off of crypto losses against other incomes
    • No carry forward (as claimed in subtitles)

Arbitrage funds vs FDs: tax efficiency for short-term goals

Key recommendation

  • Use arbitrage mutual funds instead of fixed deposits (FDs) for better tax efficiency.

Step-style framework (arbitrage vs FD)

  • FD interest:
    • Taxed as per slab (example assumes 30% slab)
  • Arbitrage funds:
    • They claim arbitrage capital gains are taxed like equity if conditions are met
    • Specifically: income under ₹1.5 lakh may be taxed at 0% (via equity taxation rules, per their framing)
  • Example logic:
    • Principal ₹10 lakh, returns ~7% over ~12 months
    • They claim zero tax under their assumed threshold conditions
  • They recommend holding periods where equity taxation advantage applies (they mention 9 months to 1 year scenarios)

Instruments mentioned

  • FDs, debt funds, arbitrage funds, and “equity taxation” rules

Hybrid funds (Equity Savings / Multi-Asset / Dynamic Asset Allocation) vs debt/FDs

Core recommendation

For a 3–5 year horizon, if you have risk appetite, prefer:

  • Equity Savings funds
  • Multi-asset funds
  • Dynamic Asset Allocation (DAA) funds

Reason given: improved post-tax outcomes due to lower capital gains taxation (e.g., 12.5% LTCG) and equity-like taxation on part of returns.

Step-style framework (allocation)

  • Equity Savings fund: approx 1/3 equities, 1/3 debt, 1/3 arbitrage
  • Multi-Asset: diversified across equity/debt/gold/silver, etc. (subtitles mention “10% each in three asset classes”)
  • DAA:
    • Manager shifts weights but tries to keep ≥65% equity to aim for equity tax treatment
  • Numbers mentioned:
    • Assumed 10% return
    • Horizon: 4–5 years or 3–5 years
    • Tax comparison: FD/bond case taxed at ~30%, while the hybrid equity-taxed portion at 12.5% yields lower tax (“smart money” paying less tax)

Caution

  • Mostly beneficial when your overall taxable income/capital gains are within the beneficial bracket, i.e., not already triggering high taxes beyond thresholds.

Profit harvesting strategy for equity mutual funds (tax-free LTCG via ₹1.25 lakh exemption)

Step-style framework (profit harvesting)

  • For listed equity / equity mutual funds:
    • LTCG is 12.5%, but exemption up to ₹1.25 lakh per year can make that portion effectively 0 tax
  • Strategy:
    • Realize gains in chunks so each year’s realized LTCG stays within the exemption limit
  • Operational cadence:
    • Sell after 12 months, then buy back (they suggest “next day” logic)
  • Applicability:
    • Also discussed for stocks, with additional trading costs like brokerage and STT, which can reduce benefit

Explicit example numbers (as provided)

  • Start: ₹5 lakh invested
  • After 4 years: portfolio grows to ₹10 lakh
  • They describe selling such that gains fall under the exemption threshold in successive years
  • Subtitles are fragmented, but the takeaway is tax saving via exemption harvesting

Caution / legality

  • Repeatedly framed as legal, not “black/gray area.”

Loss harvesting (tax loss harvesting vs profit harvesting)

Key concept

  • If you have positions with losses, you can realize them to offset gains (conceptually described as adjusting loss positions vs gains).
  • Subtitles suggest carry-forward is possible (subtitles mention “carry it for eight years,” context unclear).

Insurance & “pyramid” (risk management framing)

Step-style framework (base of pyramid)

  1. Term insurance
  2. Health insurance
  3. Investing for goals (short/medium/long term)
  4. Wealth maximization & estate preservation

Numbers/rules mentioned

  • Medical inflation: ~14–14%
  • Examples of large hospital bills are mentioned (figures inconsistent in subtitles)
  • Rule-of-thumb premium allocation:
    • 2–4% of income for health and term insurance

SWP critique (systematic withdrawal plan) + conservative withdrawal rate

Key recommendation/caution

  • Many SWP reels/marketing are described as misleading because they ignore sequence of returns.
  • They argue for conservative withdrawal rates and a hybrid portfolio (equity + debt) during withdrawal.

Step-style framework (SIP → SWP model)

  • Assume SIP for accumulation (example: ₹500/month)
  • Transition to withdrawals:
    • Withdraw around ~4% per year
    • Subtitles mention 8–10% at one point, but later anchor around ~4% (inconsistent subtitles)
  • Inflation-adjusted withdrawal:
    • Increase withdrawals by ~5% each year over long horizons (up to 30 years mentioned)
  • Example outcomes:
    • From a corpus around ₹4 crore, withdrawal yields ~₹16 lakh/year
    • They reference long-term sustainability (subtitles contain inconsistent numbers, but intent is conservative modeling)

Instruments / assets & tickers explicitly mentioned across the subtitles

  • FD (Fixed Deposit)
  • Bonds
  • EPF, NPS
  • SGB, Gold
  • Gold funds
  • Equity / equity mutual funds
  • Arbitrage mutual funds
  • Hybrid funds: Equity Savings, Multi-Asset, Dynamic Asset Allocation
  • REITs / InvITs
  • ETFs
  • Real estate / rental property / shops
  • Crypto: Bitcoin
  • Example equity stocks: Nvidia, Tesla

Presenters / sources (mentioned at end)

  • CA Nitesh Buddha Dev (Founder & CEO, Nimit Consultancy)
  • Kushal Lodha (host)

Original video