How to Get Maximum Tax Refund Legally in AY 2026-27

ITAI Blogger

June 12, 2026

Want to know how to get more tax refund without any cheating? You are not alone. Every year, lakhs of salaried employees in India end up paying excess TDS and then wait months for refunds. The good news is that you can increase your income tax refund in India legally by choosing the right tax regime, claiming all eligible deductions, fixing Form 26AS mismatches, and filing your ITR correctly for AY 2026-27 (FY 2025-26).

This detailed guide covers maximum tax refund tips for salaried employees FY 2025-26, latest rules, and practical examples to help you get every rupee back that legally belongs to you.

How to Get More Tax Refund Without Any Cheating

Bottom line: A tax refund happens when the tax paid (through TDS, TCS, advance tax) is higher than your actual tax liability.

As per the Income Tax Department, you can verify your tax credits in Form 26AS and AIS (Annual Information Statement) on the Income Tax e-Filing Portal before filing your return.

You can legally increase your refund by:

Claiming all eligible deductions
Choosing the correct tax regime
Reporting correct income
Adjusting TDS correctly
Filing revised ITR if needed
Using Section 87A rebate (if eligible)

Let us break each of these down.

Old vs New Tax Regime Refund Comparison AY 2026-27

One of the biggest factors in how to increase income tax refund in India legally is choosing the right tax regime.

✅ New Tax Regime (Default Regime)

As per the Union Budget updates and current provisions under Section 115BAC:

Standard deduction: ₹75,000 (for salaried employees)
Rebate under Section 87A: Up to ₹25,000 for income up to ₹7,00,000 (as per latest applicable provisions for new regime)
Limited deductions allowed

Refer to official regime details on the Income Tax Portal.

✅ Old Tax Regime

Standard deduction: ₹50,000
Full deductions under:
- Section 80C (up to ₹1,50,000)
- Section 80D
- HRA
- LTA
- Home loan interest under Section 24(b)

Example: Refund Comparison

Suppose your salary is ₹9,00,000 and employer deducted ₹60,000 as TDS.

Particulars	Old Regime	New Regime
80C investment	₹1,50,000	Not allowed
80D	₹25,000	Not allowed
Standard deduction	₹50,000	₹75,000
Tax payable	Lower in old regime	Higher in this case
Refund	Higher	Lower

Action Step: Use the tax calculator on the Income Tax Department website to compare before filing.

Choosing the correct regime directly impacts your refund.

Best Deductions to Claim Under Section 80C and 80D for Higher Refund

If you are under the old regime, this is where you maximise refund.

Section 80C (Maximum ₹1,50,000)

Investments eligible:

EPF
PPF
ELSS mutual funds
Life insurance premium
Sukanya Samriddhi Yojana
Principal repayment of home loan
5-year tax saving FD

Official reference: Section 80C under the Income Tax Act

Section 80D (Medical Insurance)

Self + family: ₹25,000
Senior citizen parents: ₹50,000
Preventive health check-up: ₹5,000 (within limit)

Example:

If you invest ₹1,50,000 under 80C and claim ₹25,000 under 80D, you reduce taxable income by ₹1,75,000.
At 20% tax slab, that means ₹35,000 lower tax liability. If TDS was already deducted, this increases your refund.

These are among the best deductions to claim under Section 80C and 80D for higher refund.

How to Use Section 87A Rebate to Get Zero Tax in India

This is one of the most powerful ways to get a full TDS refund while filing ITR in India.

✅ Under New Regime

If taxable income is up to ₹7,00,000, rebate under Section 87A can reduce tax to zero (subject to applicable provisions for AY 2026-27).

✅ Under Old Regime

Rebate available if taxable income is up to ₹5,00,000.

Official reference: Section 87A on the Income Tax Department portal.

Example

Salary: ₹7,00,000
Standard deduction (new regime): ₹75,000
Taxable income: ₹6,25,000

If final tax after calculation is within rebate limit, you may pay zero tax.
If employer deducted ₹20,000 TDS, you can claim full refund.

This is how many salaried individuals legally pay zero tax.

How to Claim Full TDS Refund While Filing ITR in India

To ensure maximum refund:

Step 1: Verify Form 26AS

Check TDS entries in Form 26AS via TRACES portal:
https://www.tdscpc.gov.in

Step 2: Cross-check AIS

AIS shows:

Interest income
Dividend
Securities transactions
High-value transactions

Mismatch may reduce refund.

Step 3: Report Correct Income

Do not skip:

Bank interest
FD interest
Freelance income
Capital gains

If you under-report income, refund may be delayed.

Step 4: Enter TDS Exactly as Per Form 16

Mismatch in:

TAN
Amount
Section code

can delay refund.

Refund status can be tracked on the NSDL refund tracking portal.

How to Correct Form 26AS and AIS Mismatch for Higher Refund

One of the most common mistakes that reduce income tax refund in ITR filing is mismatch.

Common Issues:

Employer did not deposit TDS
Bank reported excess interest
Duplicate entries in AIS

How to Fix:

Contact deductor (employer/bank) for correction in TDS return.
Raise feedback in AIS portal.
File rectification request under Section 154 if needed.

Correction ensures your refund is not blocked.

Common Mistakes That Reduce Income Tax Refund in ITR Filing

Avoid these errors:

Choosing wrong tax regime
Not claiming HRA
Ignoring home loan interest
Forgetting 80G donations
Entering wrong bank account details
Filing ITR after due date
Not e-verifying within 30 days

As per the Income Tax Department guidelines, refund is processed only after successful e-verification.

Tax Saving Investments to Maximise Refund Before 31 March India

Planning before 31 March of FY 2025-26 helps maximise refund in AY 2026-27.

Smart Moves:

Invest ₹1,50,000 in ELSS or PPF
Buy health insurance for ₹25,000 to ₹50,000 deduction
Pay home loan EMI principal
Make donation under Section 80G
Contribute to NPS (additional ₹50,000 under 80CCD(1B))

Example:

If you invest:

₹1,50,000 (80C)
₹50,000 (NPS)
₹25,000 (80D)

Total deduction: ₹2,25,000
At 30% slab → Tax saved ₹67,500
That significantly increases refund if TDS already deducted.

How to File Revised ITR to Increase Tax Refund in India

Missed a deduction? You can still fix it.

Under Section 139(5), you can file a revised return before the prescribed deadline.

Steps:

Login to Income Tax portal
Select "File Revised Return"
Correct deduction details
Re-submit and e-verify

This is one of the most effective ways in how to file revised ITR to increase tax refund in India.

Maximum Tax Refund Tips for Salaried Employees FY 2025-26

Here is a quick actionable checklist:

✅ Compare old vs new regime carefully
✅ Claim full 80C (₹1,50,000) if under old regime
✅ Claim 80D medical insurance
✅ Use Section 87A rebate properly
✅ Check Form 26AS and AIS
✅ Report all income correctly
✅ File before deadline
✅ E-verify immediately
✅ Revise return if you missed deductions

Following these steps ensures maximum tax refund tips for salaried employees FY 2025-26 are fully implemented.

Final Summary: Increase Income Tax Refund in India Legally

Getting a higher refund is not about loopholes. It is about smart planning and accurate filing.

To summarise:

Choose correct tax regime (old vs new tax regime refund comparison AY 2026-27 is critical)
Maximise 80C, 80D, 80CCD deductions
Use Section 87A rebate where eligible
Fix Form 26AS and AIS mismatch
Avoid common mistakes that reduce income tax refund in ITR filing
File revised ITR if needed

If you plan your investments before 31 March and file carefully, you can increase income tax refund in India legally and even claim full TDS refund while filing ITR in India without any cheating.

Start reviewing your FY 2025-26 tax position today and make sure not a single rupee of your hard-earned money stays with the tax department unnecessarily.

This content is AI Generated, use for reference only.