Top 80C deductions beyond EPF and PPF
- Rashmita Choudhary
- Apr 29
- 8 min read
Section 80C of the Income Tax Act offers taxpayers a valuable opportunity to reduce their taxable income by claiming deductions on specific investments and payments. While many are familiar with deductions for Employee Provident Fund (EPF) and Public Provident Fund (PPF), there are numerous other options to explore. By strategically utilizing these lesser-known deductions, individuals can maximize their tax savings and lower their overall tax liability.
Table of Contents:
What are the Top 80C deductions beyond EPF and PPF?
Section 80C of the Income Tax Act allows taxpayers to claim deductions on various investments and expenses, reducing their taxable income up to ₹1.5 lakh per financial year. Beyond the well-known Employee Provident Fund (EPF) and Public Provident Fund (PPF), there are several other eligible deductions available. These include investments in National Savings Certificates (NSC), Equity Linked Savings Schemes (ELSS), life insurance premiums, principal repayment on home loans, contributions to the Sukanya Samriddhi Yojana (SSY), tuition fees for children, Senior Citizens Savings Scheme (SCSS), tax-saving fixed deposits, and Unit Linked Insurance Plans (ULIPs). These options offer taxpayers various ways to optimize their tax savings while securing their financial future.
What Are Section 80C Deductions?
Section 80C of the Income Tax Act provides taxpayers with an opportunity to reduce their taxable income by claiming deductions for specified investments and expenses. The maximum deduction allowed under this section is ₹1.5 lakh per financial year. This section includes a wide range of financial instruments and expenses, enabling taxpayers to save taxes while investing in long-term, secure, and tax-efficient schemes. Beyond the commonly known Employee Provident Fund (EPF) and Public Provident Fund (PPF), there are several other eligible deductions under 80C that can help individuals maximize their tax savings.
National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a government-backed investment option with a fixed tenure of five years. It is considered a safe investment for individuals looking to avail tax deductions under Section 80C. The principal amount invested in NSC qualifies for deduction, but the interest earned is taxable. NSC is a preferred choice for conservative investors looking for guaranteed returns and tax benefits.
Equity Linked Savings Scheme (ELSS)
Equity Linked Savings Scheme (ELSS) is a tax-saving mutual fund that provides an opportunity to invest in the stock market while enjoying tax benefits. ELSS has a lock-in period of three years, the shortest among tax-saving options under Section 80C. ELSS funds are suitable for investors with a higher risk tolerance, as they offer potential for higher returns compared to traditional fixed-income investments. The investments made in ELSS qualify for a deduction up to the ₹1.5 lakh limit under Section 80C.
Life Insurance Premiums
Premiums paid for life insurance policies, including term insurance, endowment policies, and ULIPs (Unit Linked Insurance Plans), qualify for deductions under Section 80C. These premiums can be paid for policies on the taxpayer's own life, their spouse's, or their children's. The deduction limit under Section 80C applies, and taxpayers can reduce their taxable income by the total premium paid during the financial year. This deduction encourages individuals to secure their financial future while enjoying tax relief.
Principal Repayment on Home Loan
The principal portion of home loan repayments qualifies for deduction under Section 80C. This benefit is available to both first-time homebuyers and existing homeowners. The amount paid towards the principal repayment of a home loan, whether for purchasing or constructing a house, can be claimed as a deduction. This offers significant tax savings, especially for individuals who are paying off their home loans. Note that this deduction is limited to ₹1.5 lakh, and interest payments on home loans fall under a separate section for tax benefits.
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana (SSY) is a government-sponsored savings scheme aimed at securing the future of a girl child. Contributions made to SSY qualify for deductions under Section 80C, and the scheme offers attractive interest rates, which are higher than many other fixed-income products. Additionally, the maturity amount and interest earned are tax-free. SSY is a great option for parents or guardians who wish to save for their daughter's education or marriage, while also benefiting from tax deductions.
Tuition Fees for Children
Under Section 80C, taxpayers can claim deductions for tuition fees paid for their children's education. The fees must be for full-time education at an educational institution in India, and the deduction is available for a maximum of two children. The amount paid towards tuition fees is eligible for deduction, which can provide significant tax savings for parents with school-going children. However, it’s important to note that this deduction applies only to tuition fees and not to any other expenses such as hostel fees or donations.
Senior Citizens Savings Scheme (SCSS)
The Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme designed specifically for senior citizens above the age of 60. Investments in SCSS qualify for deductions under Section 80C, up to the ₹1.5 lakh limit. The scheme offers regular interest income and is considered one of the safest investment options available. SCSS is ideal for senior citizens looking for steady returns with tax-saving benefits, ensuring financial security during their retirement years.
Tax-Saving Fixed Deposits
Tax-saving fixed deposits (FDs) are offered by banks and post offices with a fixed tenure of 5 years, making them eligible for tax deductions under Section 80C. These FDs offer guaranteed returns, making them an attractive option for conservative investors looking to avail of tax benefits. The interest earned is taxable, but the initial investment qualifies for deduction, helping individuals reduce their taxable income. These FDs are a low-risk, secure way to save on taxes while earning interest.
Unit Linked Insurance Plans (ULIPs)
Unit Linked Insurance Plans (ULIPs) combine life insurance and investment, offering policyholders the dual benefit of life coverage and the potential for wealth creation through market-linked returns. Contributions to ULIPs qualify for deductions under Section 80C. These plans provide flexibility, as the policyholder can choose where to invest—equity, debt, or a combination of both. While ULIPs have a lock-in period of five years, they offer an attractive option for individuals looking to benefit from both insurance and tax-saving investments.
Important Updates and Changes in 2025
The Income Tax Bill 2025 introduces restructuring of Section 80C under Clause 123, effective from April 1, 2026. While the ₹1.5 lakh deduction limit remains unchanged, the new clause consolidates and organizes eligible deductions for better clarity. This restructuring simplifies tax planning for taxpayers by making it easier to identify qualifying investments and claim deductions. These changes aim to streamline the process, ensuring taxpayers can navigate the available deductions with more transparency.
How to Claim 80C Deductions beyond EPF and PPF
To claim deductions under Section 80C, taxpayers must ensure they have proper documentation of their investments, such as receipts, certificates, and bank statements. These documents must be submitted during the income tax return filing process to verify the eligible deductions. It’s crucial to maintain records of all tax-saving investments and payments, especially if they span multiple financial institutions or schemes. By keeping track of these details, taxpayers can maximize their deductions and reduce their taxable income.
Conclusion
Section 80C offers a wide array of investment options and expenses that can help reduce taxable income, providing significant tax savings opportunities. Beyond the popular EPF and PPF, taxpayers can benefit from schemes like NSC, ELSS, life insurance premiums, home loan repayments, SSY, SCSS, tax-saving fixed deposits, and ULIPs. With the updates under the Income Tax Bill 2025, taxpayers will have clearer and more streamlined access to these deductions. Proper documentation and strategic investment choices can help individuals fully utilize the 80C limit and enhance their tax planning for long-term financial stability.
FAQs
What is the maximum deduction limit under Section 80C?
The maximum deduction limit under Section 80C is ₹1.5 lakh per financial year. This limit applies to the cumulative total of all eligible investments and expenses, including EPF, PPF, NSC, ELSS, life insurance premiums, and more. Taxpayers can maximize their tax savings by strategically investing in these eligible instruments.
Can I combine multiple investments across different banks under Section 80C?
Yes, you can combine multiple investments across different banks and financial institutions under Section 80C, as long as the total deduction does not exceed ₹1.5 lakh. Whether you have investments in PPF, tax-saving FDs, or other schemes across various banks, they will all count towards the ₹1.5 lakh limit.
How does the new tax regime affect Section 80C deductions?
Under the new tax regime, taxpayers do not have the option to claim deductions under Section 80C, including investments in EPF, PPF, ELSS, and other qualifying instruments. While the new regime offers lower tax rates, it eliminates deductions, which means taxpayers must decide whether the reduced rates compensate for the loss of deductions.
Can I claim deductions for investments in NSC under Section 80C?
Yes, investments in the National Savings Certificate (NSC) are eligible for deductions under Section 80C. The principal amount invested qualifies for a deduction, but the interest earned on NSC is taxable in the year it is credited to your account.
What are the benefits of investing in ELSS under 80C?
ELSS (Equity Linked Savings Scheme) offers two primary benefits: tax savings under Section 80C and the potential for higher returns as they invest in the stock market. The lock-in period for ELSS is three years, which is shorter than many other tax-saving instruments, making it an attractive option for individuals willing to accept a higher level of risk for potentially greater returns.
Can I claim deductions for home loan principal repayments under Section 80C?
Yes, the principal portion of home loan repayments qualifies for deductions under Section 80C. This deduction is available for both first-time homebuyers and those with existing home loans. However, the interest paid on the home loan falls under a different section (Section 24), providing additional tax benefits.
Is tuition fee payment eligible for deduction under Section 80C?
Yes, tuition fees paid for up to two children for full-time education in India are eligible for deduction under Section 80C. This includes fees for education at schools, colleges, and universities, but excludes expenses like transportation, hostel fees, or donations.
Can I claim deductions for the interest earned from NSC under 80C?
No, the interest earned from NSC is taxable under the Income Tax Act. While the principal invested in NSC qualifies for deduction under Section 80C, the interest earned on the investment is added to your taxable income and taxed accordingly.
How does the Sukanya Samriddhi Yojana work for tax-saving purposes?
The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme for the financial benefit of a girl child. Contributions to SSY are eligible for deductions under Section 80C, up to the ₹1.5 lakh limit. The interest earned is tax-free, and the maturity amount is also exempt from tax, making it a highly beneficial tax-saving instrument.
What documents do I need to submit to claim Section 80C deductions?
To claim deductions under Section 80C, you need to provide valid proof of your investments. This includes receipts, certificates, bank statements, or any other documents issued by the financial institution where you invested. These documents must be submitted when filing your Income Tax Return (ITR).
Can I claim deductions on ULIPs under Section 80C?
Yes, premiums paid towards Unit Linked Insurance Plans (ULIPs) are eligible for deductions under Section 80C. ULIPs are insurance-cum-investment products that allow you to invest in equity, debt, or a combination of both, while also providing life insurance coverage. The premiums paid qualify for tax-saving benefits under 80C.
Is SCSS eligible for Section 80C deductions for senior citizens?
Yes, investments in the Senior Citizens Savings Scheme (SCSS) are eligible for deductions under Section 80C. SCSS is a government-backed savings scheme available to individuals above the age of 60. It offers regular interest income, and the principal investment qualifies for a tax deduction under Section 80C up to the ₹1.5 lakh limit.
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