Seeking Advice: High Tax Shortfall on Job Switch + Let-Out House Property Loss in FY 2025-26

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This discussion seeks expert advice on a client's tax computation for FY 2025-26, involving a mid-year job change and a let-out property. The client faces a significant tax shortfall, particularly under the New Tax Regime where house property loss cannot be fully offset. The user is exploring ways to minimise the net tax liability, optimise HRA claims under the Old Regime, and strategise the best approach for carrying forward property losses.

SURAJ VISHWAKARMA

SURAJ VISHWAKARMA (Querist)
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25 July 2026 Dear Experts & Members,

I am seeking your technical insights on a client tax computation for FY 2025-26 (AY 2026-27) involving a mid-year job switch and a let-out property.

Here is the anonymous summary of the facts:
Client Summary & Income Details:

Employer 1 (Resigned Mid-Year): Gross Salary ₹11,24,960 (Includes Leave Encashment ₹1,10,180 exempt u/s 10(10AA) & HRA ₹2,02,958). TDS Deducted: ₹1,24,817.

Employer 2 (Joined Mid-Year): Gross Salary ₹27,15,326. TDS Deducted: ₹3,86,983.

House Property (Let-out): Gross Rent Received ₹96,000. Interest Paid on ICICI Home Loan u/s 24(b) ₹8,56,044. Net Loss: ₹7,88,844.

Chapter VI-A Inputs: Sec 80C Principal ₹1,55,230, Sec 80D Self/Spouse ₹25,000, Sec 80D Senior Citizen Parents ₹47,000, Bank Savings Interest ₹3,438, STCG on MF ₹2,406.

Residential City: Pune (Non-Metro).

Current Tax Working & Issue:

New Tax Regime:

Taxable Income: ₹36,60,950 (Gross Salary ₹38.40L less ₹1.10L Leave Encashment, ₹75k Std. Deduction, plus ₹5.8k Other Income).

Note: Home loan loss is capped at ₹0 against salary income under the New Regime (only offsets rental income down to zero).

Total Tax Payable (incl. Cess): ₹7,05,416

TDS Already Paid: ₹5,11,800

Net Outstanding Payable: ₹1,93,616

Old Tax Regime:

Taxable Income (after ₹2L House Property Loss set-off + ₹2.25L VI-A deductions): ₹32,60,510.

Total Tax Payable: ₹8,22,279 (Higher by ~₹1.16 Lakhs compared to New Regime).

Queries for Members:

Minimizing Net Liability: Is there any legitimate tax-saving angle, exemption, or reporting mechanism under the New/Old Regime that we might be missing to bridge this ₹1.93L tax gap?

HRA Optimization (Old Regime): Since she was living in rented accommodation in Pune during her tenure at the first employer, if rent receipts/agreements are introduced now, would the Old Regime become competitive against the New Regime? What threshold of HRA exemption would be required to break even with the New Regime savings?

House Property Loss Strategy: Is opting for the New Regime to save ₹1.16L immediately better than taking the Old Regime to carry forward the remaining ₹5.88L unabsorbed house property loss for future years?

Looking forward to your valuable opinions and suggestions.

Thanks & Regards,

Fellow Professional / Member

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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26 July 2026 Immediate Action: The New Tax Regime yields a lower overall tax liability (₹7,05,416) compared to the Old Regime (₹8,22,279), saving ~₹1.16 Lakhs upfront.

Remaining Gap: The net outstanding payable under the New Regime stands at ₹1,93,616 after accounting for total TDS of ₹5,11,800.

Old Regime Viability: Requires over ~₹3.72L in additional deductions/HRA claims to beat the New Regime's tax figures.

SURAJ VISHWAKARMA

SURAJ VISHWAKARMA (Querist)
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27 July 2026 Thank you for your reply but there aren't any deductions available other than already specified

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