Section 80C is one of the most widely used income-tax deductions in India. Whether you are a salaried employee or a business owner, Section 80C helps you legally reduce your taxable income by up to ₹1,50,000 every financial year.
This guide explains eligibility, investment options, limits, rules, and best strategies to help you maximise your tax savings under Section 80C.
What Is Section 80C?
Section 80C of the Income Tax Act, 1961 allows individuals and Hindu Undivided Families (HUFs) to claim a deduction of up to ₹1.5 lakh from their taxable income by investing in specified schemes and payments.
This deduction is available under the Old Tax Regime only.
If you opt for the New Tax Regime, Section 80C benefits cannot be claimed.
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Eligibility for Section 80C
| Category | Eligible? |
|---|---|
| Individual taxpayers | ✔ Yes |
| HUF | ✔ Yes |
| Companies / Firms | ✘ No |
| NRIs | ✔ Yes (limited options) |
Maximum Deduction Limit Under Section 80C
You can claim up to ₹1,50,000 per financial year.
👉 Even if you invest more than ₹1.5 lakh, deduction allowed = ₹1.5 lakh only.
List of Investments & Payments Eligible Under Section 80C
Section 80C covers both investments and expenses.
Here is a complete list:
A. Eligible Investments
1. Public Provident Fund (PPF)
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15-year lock-in
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Government-backed
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Tax-free interest
2. Employees’ Provident Fund (EPF)
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Automatically deducted from salary
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Employer’s contribution NOT eligible
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Interest is tax-free (if rules followed)
3. Equity-Linked Savings Scheme (ELSS)
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Market-linked mutual fund
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Lowest lock-in: 3 years
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High return potential
4. National Savings Certificate (NSC)
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5-year lock-in
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Guaranteed returns
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Interest taxable each year
5. Tax Saver Fixed Deposit
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5-year lock-in
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Interest taxable
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Suitable for low-risk investors
6. Sukanya Samriddhi Yojana (SSY)
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For girl child
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One of the highest government-backed interest rates
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Fully tax-free maturity
7. Senior Citizens Savings Scheme (SCSS)
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For individuals aged 60+
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High guaranteed returns
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5-year lock-in
B. Eligible Payments
1. Life Insurance Premium
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For self, spouse, children
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Policy must meet limit conditions
2. Tuition Fees of Children
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Only for full-time education
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Maximum two children
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Payments to registered schools/colleges only
3. Home Loan Principal Repayment
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EMI principal qualifies
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Property should not be sold within 5 years
4. Registration & Stamp Duty on Property Purchase
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One-time benefit
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Can be claimed even without a home loan
Section 80C vs 80CCC vs 80CCD(1)
All of these fall under the combined limit of ₹1.5 lakh.
| Section | Covers | Limit |
|---|---|---|
| 80C | Investments + expenses | ₹1.5 lakh |
| 80CCC | Pension funds | Included in ₹1.5 lakh |
| 80CCD(1) | NPS employee contribution | Included in ₹1.5 lakh |
Extra deduction:
80CCD(1B) gives an additional ₹50,000 for NPS, over and above 80C limit.
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How to Choose the Best 80C Option?
Choose based on your goals:
| Goal | Best Option |
|---|---|
| High returns | ELSS |
| Safe, long-term savings | PPF / SSY |
| Retirement | NPS (extra ₹50,000 benefit) |
| Low-risk guaranteed | NSC / Tax saver FD |
| Education of children | Tuition fees |
| Home purchase | Stamp duty + principal repayment |
Example: How Much Tax Can You Save?
If you invest ₹1,50,000 under Section 80C:
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Tax Slab 5% → Save ₹7,500
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Tax Slab 20% → Save ₹30,000
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Tax Slab 30% → Save ₹45,000
Plus, if you invest ₹50,000 in NPS → ₹50,000 * tax rate
Example (30% slab): Save additional ₹15,000
What Is Not Allowed Under Section 80C?
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Health insurance premium (covered under 80D)
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Home loan interest (covered under 24(b))
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Donations (covered under 80G)
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Interest on FD/RD
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ULIP charges or late fees
Key Points to Remember
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Limit is ₹1,50,000 only.
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Available only under the Old Tax Regime.
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Some options have long lock-ins (PPF, SSY).
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ELSS has the shortest lock-in period: 3 years.
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NPS gives extra ₹50,000 deduction under 80CCD(1B).
Conclusion
Section 80C is a powerful tax-saving tool that lets you reduce your taxable income by ₹1.5 lakh every year through disciplined investments and essential payments. By choosing the right combination of ELSS, PPF, NPS, life insurance, and home loan principal, you can maximise your tax savings while building long-term wealth.
FAQs on Section 80C
1. What is the maximum deduction available under Section 80C?
The maximum deduction allowed under Section 80C is ₹1,50,000 per financial year for individuals and HUFs. Even if you invest more, the limit remains the same.
2. Is Section 80C available under the New Tax Regime?
No. Section 80C benefits are available only under the Old Tax Regime.
Under the New Tax Regime, you cannot claim this deduction.
3. Which investments qualify for deduction under Section 80C?
Eligible investments include PPF, EPF, ELSS mutual funds, NSC, Tax Saver FD, Sukanya Samriddhi Yojana, Senior Citizen Savings Scheme, pension funds, and government-backed savings schemes.
4. Can I claim tuition fees under Section 80C?
Yes. Tuition fees paid for up to two children for full-time education in recognized schools, colleges, or universities are eligible for deduction.
5. Does home loan EMI qualify for Section 80C?
Yes, but only the principal component of a home loan EMI is eligible under Section 80C.
The interest portion is covered under Section 24(b).
6. Can I claim Section 80C benefit for life insurance premiums?
Yes. Life insurance premiums paid for self, spouse, and children qualify under Section 80C, provided the premium does not exceed prescribed limits based on the sum assured.
7. Is NPS covered under Section 80C?
Yes, NPS contributions fall under Section 80CCD(1) and are included in the ₹1.5 lakh limit.
Additionally, you get an extra ₹50,000 deduction under Section 80CCD(1B).
8. Are all ELSS mutual funds eligible for Section 80C?
Yes. All Equity-Linked Savings Schemes (ELSS) with a 3-year lock-in period are fully eligible for Section 80C deduction.
9. Can NRIs claim Section 80C benefits?
Yes, NRIs can claim Section 80C, but only for specific investments such as ELSS, life insurance premiums, home loan principal, and certain government schemes.
10. Can both husband and wife claim 80C separately?
Yes. If both are earning individuals, each can claim ₹1.5 lakh separately, provided they make eligible investments from their own income.