Money tasks for the start of the financial year

The financial year runs from 1 April to 31 March, so April is when a few money tasks are easiest to sort out. Tell your employer which tax regime to use for your salary. If you are in the old regime, spread any tax-saving investments through the year. Raise your SIP if your pay has gone up. Give your bank Form 121 if it applies to you. Check your KYC and your nominees.

What changed from April 2026?

Income from 1 April 2026 falls under the Income-tax Act, 2025, which calls the year "tax year 2026-27". Its first return is due in July 2027.

A tax year is the twelve months of the financial year that starts on 1 April. Some numbers changed too. Section 123 (the old Section 80C) is the new name for that deduction, Form 121 replaces Forms 15G and 15H, and Form 124 replaces Form 12BB. The post on the Income-tax Act, 2025 has the details.

Should you choose your tax regime in April?

You make the final choice in your tax return, but April is when it starts to matter for take-home pay. TDS (tax deducted at source) is tax the payer cuts before paying you. For tax year 2026-27, the CBDT (Central Board of Direct Taxes) says the employer must reset salary TDS "considering projected income, deductions, and tax regime".

The old tax regime is the older set of income-tax rules, which allows deductions such as section 123. The new tax regime is the default, with lower rates and few deductions. The new regime applies unless you opt out.

Your employer will ask at the start of the year which regime to deduct tax under. If you say nothing, it deducts under the new regime. That choice only sets your monthly TDS. The regime you are actually taxed under is the one you pick in your return, so if you want the old regime you choose it when you file.

The features of the new tax regime post has the slabs and what the new regime allows.

Should you start tax-saving investments in April?

If you are in the old regime, spreading section 123 investments from April avoids a March rush. Under the new regime they bring no deduction.

Section 123 allows a deduction for amounts paid in the tax year on its listed items. The cap is ₹1,50,000 a year across all of them, for individuals and HUFs (Hindu undivided families), in the old regime only. A payment counts for tax year 2026-27 only if it is made by 31 March 2027. Items that count include ELSS funds, a five-year tax-saving fixed deposit and PPF.

An ELSS fund is a mutual fund that counts under section 123. It carries a lock-in, a period when you cannot sell at all. For ELSS that is three years from each purchase.

Take Priya, 33, a teacher in Surat, who is in the old regime. She plans ₹1,50,000 of section 123 investments in tax year 2026-27. She is choosing between two ways to buy ELSS units, and the amounts are made up for illustration.

• Monthly from April: ₹12,500 a month, which is ₹1,50,000 divided by 12. Her April 2026 units are free to sell from April 2029 and her March 2027 units from March 2030.
• One payment in March 2027: all her units stay locked until March 2030.

The deduction is ₹1,50,000 either way, and only because she is in the old regime. What changes is her monthly cash flow, when the units are free to sell, and how her purchases are spread across prices. Spreading purchases does not promise a better result. The choice is hers. The ELSS funds page has the category rules.

• Tax-saving fixed deposit: a fixed deposit (FD) is money placed with a bank for a set period at a rate fixed when you open it. A five-year tax-saving FD at a scheduled bank counts under section 123 for individuals and HUFs, in the old regime only. You cannot encash it before five years, and its interest is taxable. See what a tax-saving fixed deposit is.
• PPF: the Public Provident Fund, a government savings scheme with a 15-year account. Deposits must be at least ₹500 and at most ₹1,50,000 in a financial year. An account that misses the ₹500 minimum is treated as discontinued. PPF also counts under section 123, in the old regime only. See how to open a PPF account.

Your employer collects proof of these claims in Form 124. A deduction you did not declare to the employer can still be claimed in your return. For the full list of ways to save tax, see the tax-saving guide.

Should you raise your SIPs after a pay rise?

A pay rise is the easiest moment to invest more, because the extra money has not yet reached your spending. A SIP is a fixed amount invested at regular intervals, usually monthly, and each instalment buys units at that day's NAV, the price of one unit of the fund.

Raising the SIP when income rises is one way to invest more over time. A step-up SIP does the raising automatically. This is not advice to pick any step-up rate. The step-up SIP post explains how it works, and the SIP calculator lets you try different amounts.

Salaried people can also use VPF. VPF is extra money you choose to put into your own EPF account through your employer, above the 12% that is compulsory. EPF is the Employees' Provident Fund, the retirement account that salaried workers and their employers pay into each month. Your employer does not have to match VPF.

To start VPF, ask your employer's payroll team. Interest is taxable only on your own contributions, made on or after 1 April 2021, above ₹2,50,000 in a financial year. The limit is ₹5,00,000 where your employer contributes nothing to that fund, and VPF counts toward it. How EPF interest is taxed works through the rule, and PF and VPF covers the scheme itself.

How should you review your goals and investments?

Start by checking each goal's amount and date. Then check whether your investments still suit them. SEBI's investor checklist includes "Periodically review investment portfolio".

As a goal comes closer, there is less time for a fall to recover before you need the money. Some investors move money out of equity (shares of companies) as a goal nears.

Rebalancing means bringing your mix of investments back to where you set it. It is about keeping risk where you set it, and it does not promise a higher return. Some investors rebalance when an asset class has moved about 5 percentage points from its target. Others check once or twice a year. Neither is a SEBI or AMFI rule. The post on how to rebalance a mutual fund portfolio covers the mechanics.

Financial planning for beginners shows how to make a first plan, and the four pillars of personal finance shows how to work out your net worth once a year. If April resolutions tend to fade by June, why people struggle to stick to their financial resolutions is worth a read.

Do you need to submit Form 121 in April?

If the tax on your total income for the year will be nil, you can give the bank Form 121 (it replaces Forms 15G and 15H) so it does not cut TDS on your fixed deposit interest. If you are under 60, you can use it only if the income you declare is also below the tax-free limit.

The form covers one tax year, so give it again each April. For the TDS rules on deposit interest, see taxation on fixed deposits.

What paperwork should you check?

Three small items: your KYC details, your nominees and the link between your PAN and Aadhaar.

KYC means know your customer, the identity and address checks a bank, lender or fund house must do. The mutual fund Investor Charter lists keeping your KYC details up to date, including address, tax status, residency, PAN and bank account details, among an investor's duties. See mutual fund KYC.

Nominees. A nominee is the person you name to receive the money if you die. Since 1 September 2026 you can name up to three nominees for a mutual fund folio and say what share each gets. If you don't, they share equally. You can change or cancel a nomination as often as you like. See mutual fund nomination.

PAN and Aadhaar. PAN is your Permanent Account Number. If you are eligible for an Aadhaar number and do not report it, your PAN can be made inoperative. Check that yours is linked.