Section 80C Deduction Under the Income Tax Act: Limit, Eligible Investments, and Tax Benefits
- Ankita Murkute
- Jan 1
- 11 min read
Section 80C of the Income Tax Act, 1961 allows eligible taxpayers to claim a deduction of up to ₹1.5 lakh in a financial year for specified investments and payments. The deduction is available to individuals and Hindu Undivided Families (HUFs), subject to the conditions prescribed under the Act.
Eligible payments and investments under Section 80C include PPF, EPF, ELSS, NSC, life insurance premium, Sukanya Samriddhi Yojana, principal repayment of housing loan, and tuition fees, among other specified options.
Table of Content
Section 80C Under the Income Tax Act, 2025: Key Amendments and Corresponding Provisions
Section 80C Deduction List for FY 2025-26: Eligible Investments and Payments
PPF Deduction Under Section 80C: Limit, Lock-in, and Tax Treatment
EPF Deduction Under Section 80C: Limit, Lock-in, and Tax Treatment
National Savings Certificate (NSC) Deduction Under Section 80C
Senior Citizens' Savings Scheme (SCSS) Deduction Under Section 80C
Section 80C Deduction under the Old Tax Regime vs New Tax Regime
Key Highlights of Section 80C Deduction
Section 80C deduction is available only under the old tax regime.
The maximum deduction limit under Section 80C is ₹1.5 lakh per financial year.
The limit applies to the aggregate amount of eligible investments and payments, not separately to each item.
An additional deduction of ₹50,000 may be claimed under Section 80CCD(1B) for eligible contribution to specified pension schemes.
Under the Income Tax Act, 2025, the corresponding provision is covered under Section 123.
What is Section 80C Deduction?
Section 80C provides a deduction from gross total income for specified investments, contributions, and eligible payments. It reduces the taxpayer’s taxable income, subject to the overall limit of ₹1.5 lakh in a financial year.
This deduction is available for prescribed tax-saving investments and payments such as government-backed savings schemes, retirement contributions, life insurance premiums, children’s tuition fees, and principal repayment of a housing loan.
The deduction limit of ₹1.5 lakh is cumulative. This means that even if a taxpayer invests in multiple eligible instruments, the total deduction under Section 80C cannot exceed ₹1.5 lakh.
Taxpayers opting for the new tax regime are not eligible to claim deduction under Section 80C.
Section 80C Under the Income Tax Act, 2025: Key Amendments and Corresponding Provisions
As introduced under the Income Tax Act, 2025, the provisions relating to deductions previously covered under Sections 80C, 80CCC, and 80CCD(1) of the Income Tax Act, 1961 have been consolidated under Section 123 read with Schedule XV. The new legislation becomes effective from 1st April 2026 and applies to Tax Year 2026-27 onwards.
Although the section numbers have changed under the new law, the deductions continue to be available only to taxpayers opting for the old tax regime. Taxpayers opting for the new tax regime are not eligible to claim these deductions under the Income Tax Act, 2025.
Important: The provisions of the Income Tax Act, 1961 continue to govern income earned up to 31st March 2026 (relevant to AY 2026-27). The Income Tax Act, 2025 applies only to income earned on or after 1st April 2026.
The table below provides a comparison of the corresponding provisions under the Income Tax Act, 1961 and the Income Tax Act, 2025.
Particulars | Income Tax Act, 1961 | Income Tax Act, 2025 |
Deduction for eligible investments and specified payments | Section 80C | Section 123 read with Schedule XV |
Deduction for contribution to specified annuity or pension plans | Section 80CCC | Section 123 read with Schedule XV |
Employee's contribution to NPS (within overall deduction limit) | Section 80CCD(1) | Section 123 read with Schedule XV |
Additional deduction for NPS contribution | Section 80CCD(1B) | Section 124(3) |
Overall deduction limit for Sections 80C, 80CCC and 80CCD(1) | Section 80CCE | Section 123 |
Chapter governing deductions from Gross Total Income | Chapter VI-A | Chapter VIII (commencing from Section 122) |
Section 80C Deduction List for FY 2025-26: Eligible Investments and Payments
The following investments, contributions, and specified payments are eligible for deduction under Section 80C of the Income Tax Act, 1961, subject to the overall limit of ₹1.5 lakh in a financial year.
Eligible 80C Investment / Payment | Nature of Deduction |
Life insurance premium | Premium paid for eligible life insurance policies |
Public Provident Fund (PPF) | Contribution made to a PPF account |
Employees’ Provident Fund (EPF) | Employee’s contribution to EPF |
Equity Linked Savings Scheme (ELSS) | Investment in notified tax-saving mutual funds |
National Savings Certificate (NSC) | Investment in eligible NSC schemes |
Sukanya Samriddhi Yojana (SSY) | Deposit made for an eligible girl child |
5-year tax-saving fixed deposit | Investment in notified bank or post office FD |
Senior Citizens’ Savings Scheme (SCSS) | Deposit made under SCSS |
Home loan principal repayment | Principal portion of housing loan repayment |
Stamp duty and registration charges | Payment made for purchase of house property |
Children’s tuition fees | Tuition fees paid for up to two children |
The deduction under Section 80C is available on the aggregate amount of eligible investments and payments. Even if the total contribution exceeds ₹1.5 lakh, the maximum deduction allowed under Section 80C remains restricted to ₹1.5 lakh for the financial year.
Maximum Deduction Limit Under Section 80C for FY 2025-26
The maximum deduction available under Section 80C is ₹1,50,000 for a financial year.
This limit applies to the combined total of all eligible investments and specified payments.
If the taxpayer invests more than ₹1,50,000 across eligible options, the deduction will still be restricted to ₹1,50,000.
Example
If a taxpayer makes the following eligible investments:
₹70,000 in PPF
₹45,000 in ELSS
₹55,000 towards life insurance premium
The total investment is ₹1,70,000, but the deduction allowed under Section 80C will be limited to ₹1,50,000.
An additional deduction of up to ₹50,000 may be claimed under Section 80CCD(1B) for eligible contributions to the National Pension System (NPS), subject to prescribed conditions.
Section | Eligible Investment / Contribution | Maximum Deduction | Included in ₹1.5 Lakh Limit? |
Section 80C | PPF, EPF, ELSS, life insurance premium, home loan principal, NSC, SSY, SCSS | ₹1,50,000 | Yes |
Section 80CCC | Contribution to specified pension or annuity plans | ₹1,50,000 | Yes |
Section 80CCD(1) | Employee contribution to NPS | ₹1,50,000 | Yes |
Section 80CCD(1B) | Additional contribution to NPS | ₹50,000 | No, separate deduction |
Popular Section 80C Investment Options and Lock-in Periods
The following table presents commonly used Section 80C investment options along with their indicative return profile, lock-in period, and risk category. Taxpayers should evaluate the investment objective, liquidity requirement, risk level, and eligibility conditions before claiming deduction under Section 80C.
Investment Option | Indicative Return / Interest | Lock-in Period | Risk Category |
Equity Linked Savings Scheme (ELSS) | Market-linked returns | 3 years | High |
National Pension System (NPS) | Market-linked returns | Generally up to retirement age | Depends on fund allocation |
Unit Linked Insurance Plan (ULIP) | Market-linked returns | 5 years | Medium |
5-Year Tax-Saving Fixed Deposit | As notified by bank/post office | 5 years | Low |
Public Provident Fund (PPF) | Government-notified interest rate | 15 years | Low |
Senior Citizens’ Savings Scheme (SCSS) | Government-notified interest rate | 5 years, extendable as per rules | Low |
National Savings Certificate (NSC) | Government-notified interest rate | 5 years | Low |
Sukanya Samriddhi Yojana (SSY) | Government-notified interest rate | Until maturity as per scheme rules | Low |
Note: The aggregate deduction under Section 80C is restricted to ₹1.5 lakh per financial year, irrespective of the number of eligible investments or payments made.
Eligibility to Claim Deduction under Section 80C
The deduction under Section 80C is available only to Individuals and Hindu Undivided Families (HUFs). Other categories of taxpayers, including companies, partnership firms, LLPs, trusts (unless specifically eligible), and other artificial juridical persons, are not entitled to claim deduction under this section.
Illustration of Tax Savings Available under Section 80C
The following illustration demonstrates the impact of claiming a deduction under Section 80C on the taxable income and tax liability under the old tax regime.
Example:
Assume Ms. Priya has the following income during FY 2025-26:
Income from Salary: ₹12,00,000
Income from Interest: ₹80,000
Eligible investment under Section 80C (PPF/ELSS/EPF etc.): ₹1,50,000
The tax computation is as follows:
Particulars | With Section 80C Deduction | Without Section 80C Deduction |
Salary Income | ₹12,00,000 | ₹12,00,000 |
Less: Standard Deduction | (₹75,000) | (₹75,000) |
Income from Salary | ₹11,25,000 | ₹11,25,000 |
Income from Other Sources | ₹80,000 | ₹80,000 |
Gross Total Income | ₹12,05,000 | ₹12,05,000 |
Less: Deduction under Section 80C | (₹1,50,000) | — |
Total Taxable Income | ₹10,55,000 | ₹12,05,000 |
Tax Liability (as per applicable old regime rates*) | Lower | Higher |
Inference:By claiming the maximum eligible deduction of ₹1,50,000 under Section 80C, the taxpayer reduces the total taxable income by the same amount. The actual tax saving depends on the applicable slab rate, surcharge (if any), and health & education cess under the old tax regime.
Note: The benefit of deduction under Section 80C is available only to taxpayers opting for the old tax regime and is subject to the overall ceiling prescribed under the Income-tax Act.
How to Claim Section 80C Deduction in ITR
To claim deduction under Section 80C, the taxpayer must make eligible investments or payments during the relevant financial year and report the deduction correctly while filing the Income Tax Return.
Make eligible investments or payments on or before 31st March of the financial year.
Maintain supporting documents such as premium receipts, deposit proof, ELSS statements, tuition fee receipts, or home loan certificates.
Salaried taxpayers should declare eligible investments to the employer for correct TDS computation.
While filing ITR, report the deduction under Chapter VI-A deductions.
Ensure that the total deduction claimed under Section 80C does not exceed ₹1.5 lakh.
ELSS Deduction Under Section 80C
Equity Linked Savings Scheme (ELSS) is a notified tax-saving mutual fund eligible for deduction under Section 80C. ELSS primarily invests in equity and is suitable for taxpayers who are willing to take market-linked risk while claiming tax deduction under the old tax regime.
Particulars | Details |
Deduction limit | Up to ₹1.5 lakh under Section 80C |
Lock-in period | 3 years |
Nature of investment | Equity-oriented mutual fund |
Tax treatment of returns | LTCG tax applies on gains exceeding the prescribed exemption limit |
Suitable for | Taxpayers seeking tax deduction with market-linked growth potential |
PPF Deduction Under Section 80C: Limit, Lock-in, and Tax Treatment
Public Provident Fund (PPF) is a government-backed savings scheme eligible for deduction under Section 80C. It is generally used for long-term tax planning and capital accumulation, subject to the prescribed lock-in period and scheme rules.
Particulars | Details |
Deduction limit | Up to ₹1.5 lakh under Section 80C |
Lock-in period | 15 years |
Nature of investment | Government-backed fixed-income savings scheme |
Tax treatment | Interest and maturity proceeds are tax-exempt, subject to applicable rules |
Suitable for | Taxpayers seeking low-risk long-term tax-saving investment |
EPF Deduction Under Section 80C: Limit, Lock-in, and Tax Treatment
Employees’ Provident Fund (EPF) is a statutory retirement savings scheme for salaried employees. The employee’s contribution to EPF qualifies for deduction under Section 80C, subject to the overall limit of ₹1.5 lakh.
Particulars | Details |
Deduction limit | Up to ₹1.5 lakh under Section 80C |
Lock-in period | Generally up to retirement, subject to permitted withdrawals |
Nature of investment | Statutory retirement savings contribution |
Tax treatment | Tax-exempt if prescribed conditions are satisfied |
Suitable for | Salaried taxpayers building retirement corpus |
National Savings Certificate (NSC) Deduction Under Section 80C
The National Savings Certificate (NSC) is a Government-notified small savings instrument eligible for deduction under Section 80C. The amount invested qualifies for deduction within the prescribed limit, subject to the conditions specified under the Income-tax Act.
Particulars | Details |
Deduction limit | Eligible for deduction up to ₹1.5 lakh under Section 80C |
Lock-in period | 5 years |
Nature of investment | Government-backed fixed-income savings instrument |
Tax treatment | Interest is taxable; accrued interest (except in the final year) is deemed reinvested and may qualify for deduction under Section 80C, subject to conditions |
Suitable for | Taxpayers seeking stable returns with tax deduction benefits |
Sukanya Samriddhi Yojana (SSY) Deduction Under Section 80C
Sukanya Samriddhi Yojana (SSY) is a Government-backed savings scheme introduced for the financial security of a girl child. Contributions made to the scheme qualify for deduction under Section 80C, subject to the prescribed monetary limit.
Particulars | Details |
Deduction limit | Eligible for deduction up to ₹1.5 lakh under Section 80C |
Lock-in period | Maturity as prescribed under the scheme; partial withdrawals permitted subject to conditions |
Nature of investment | Government-backed long-term savings scheme |
Tax treatment | Contributions, interest, and maturity proceeds are exempt from tax, subject to applicable provisions |
Suitable for | Parents or legal guardians planning long-term savings for a girl child |
Senior Citizens' Savings Scheme (SCSS) Deduction Under Section 80C
The Senior Citizens' Savings Scheme (SCSS) is a Government-backed deposit scheme available to eligible senior citizens. Deposits made under the scheme qualify for deduction under Section 80C, within the overall deduction limit.
Particulars | Details |
Deduction limit | Eligible for deduction up to ₹1.5 lakh under Section 80C |
Lock-in period | 5 years, extendable as per scheme provisions |
Nature of investment | Government-backed fixed-income savings scheme |
Tax treatment | Interest received is taxable in accordance with the applicable provisions of the Income-tax Act |
Suitable for | Senior citizens seeking regular income with tax deduction benefits |
Section 80C Deduction under the Old Tax Regime vs New Tax Regime
The availability of deduction under Section 80C depends on the tax regime opted for by the taxpayer.
Old Tax Regime: Deduction under Section 80C is available up to the prescribed limit of ₹1.5 lakh, subject to fulfillment of specified conditions.
New Tax Regime: Deduction under Section 80C is not available. Investments eligible under Section 80C do not reduce taxable income for taxpayers opting for the new tax regime.
Taxpayers should evaluate the overall tax liability under both regimes before exercising the option, considering all eligible deductions and exemptions.
Best Practices to Maximise Benefits under Section 80C
Taxpayers may optimise the deduction available under Section 80C by following these tax planning measures:
Make eligible investments before the end of the relevant financial year to ensure deduction eligibility.
Utilise the overall deduction limit of ₹1.5 lakh efficiently across eligible investments and specified payments.
Diversify investments across eligible instruments such as PPF, ELSS, EPF, NSC, SSY, SCSS, and tax-saving fixed deposits based on financial objectives.
Maintain documentary evidence of investments and payments for assessment and verification purposes.
Consider the impact of the chosen tax regime, as Section 80C deductions are available only under the old tax regime.
FAQs
Q1. What is the maximum deduction available under Section 80C?
The maximum deduction available under Section 80C is ₹1,50,000 in a financial year. This limit applies to the combined total of all eligible investments and payments.
Q2. Is Section 80C deduction available under the new tax regime?
No. Deduction under Section 80C is available only under the old tax regime. Taxpayers opting for the new tax regime cannot claim this deduction.
Q3. Can I claim Section 80C deduction while filing ITR if I did not submit proof to my employer?
Yes. If eligible investments or payments were made during the financial year, the deduction can be claimed while filing the ITR even if proof was not submitted to the employer. The taxpayer should retain supporting documents.
Q4. For which year can I claim an 80C investment made on 30 April 2025?
An investment made on 30 April 2025 falls in FY 2025-26. It can be claimed while filing the ITR for FY 2025-26, subject to eligibility and the ₹1.5 lakh limit.
Q5. Can life insurance premium be claimed under Section 80C?
Yes. Life insurance premium paid for an eligible policy can be claimed under Section 80C, subject to the conditions prescribed under the Income Tax Act.
Q6. Is a 5-year fixed deposit eligible under Section 80C?
Yes. Investment in a notified 5-year tax-saving fixed deposit is eligible for deduction under Section 80C.
Q7. Can tuition fees be claimed under Section 80C?
Yes. Tuition fees paid to an eligible school, college, university, or educational institution in India for full-time education can be claimed under Section 80C, subject to prescribed conditions.
Q8. In which year can stamp duty and registration charges be claimed?
Stamp duty and registration charges paid for purchase of a house property can be claimed in the financial year in which the payment is made, subject to Section 80C conditions.
Q9. Can NRIs claim Section 80C deduction?
Yes. NRIs can claim Section 80C deduction for eligible investments and payments, such as life insurance premium and ELSS, subject to applicable conditions.
Q10. Can I claim both Section 80C and Section 80D?
Yes. Section 80C and Section 80D are separate deductions. A taxpayer can claim both if the eligibility conditions under each section are satisfied.
Q11. Are ULIP investments eligible under Section 80C?
Yes. Premium paid towards an eligible ULIP can be claimed under Section 80C, subject to the prescribed conditions.
Q12. What is Section 80CCD(1)?
Section 80CCD(1) allows deduction for an individual’s contribution to the National Pension System (NPS), subject to the prescribed percentage limit and the overall ceiling under Section 80CCE.
Q13. What is Section 80CCD(2)?
Section 80CCD(2) allows deduction for the employer’s contribution to NPS. The eligible limit depends on the type of employer and the applicable tax regime.
Q14. What is Section 80CCE?
Section 80CCE provides that the combined deduction under Sections 80C, 80CCC, and 80CCD(1) cannot exceed ₹1,50,000 in a financial year.
