What is the maximum limit for deductions under Section 80C in 2025?

The maximum limit for deductions under Section 80C for the financial year 2025-26 is ₹1,50,000. This applies to a combination of eligible investments and expenses within the financial year.

Can I claim Section 80C deductions in the new tax regime?

No, taxpayers opting for the new tax regime cannot claim deductions under Section 80C. The new regime offers lower tax rates but does not allow for deductions like those under Section 80C.

How does Section 80C apply in the old tax regime?

In the old tax regime, taxpayers can claim up to ₹1,50,000 as deductions under Section 80C. This applies to investments such as EPF, PPF, ELSS, and eligible expenses like tuition fees and housing loan principal repayments.

What types of investments are eligible under Section 80C?

Eligible investments under Section 80C include Employee Provident Fund (EPF), Public Provident Fund (PPF), Life Insurance premiums, National Savings Certificates (NSC), 5-year fixed deposits with banks or post offices, and Equity Linked Savings Schemes (ELSS).

How much tax can I save by investing in 80C instruments?

The tax savings depend on your income tax slab. For example, a taxpayer in the 30% tax bracket can save up to ₹46,800 by investing the full ₹1,50,000 in eligible Section 80C instruments, while savings would be lower for those in lower tax brackets.

Are tuition fees included under Section 80C for deductions?

Yes, tuition fees paid for up to two children’s education are eligible for deductions under Section 80C. This includes fees for elementary, secondary, and higher education.

Can I claim deductions on housing loan principal repayment under Section 80C?

Yes, the principal repayment of a housing loan is eligible for deduction under Section 80C, helping homeowners reduce their taxable income.

How do I file my ITR to claim Section 80C deductions?

To claim Section 80C deductions, you must include the details of your eligible investments and expenses in your Income Tax Return (ITR) while filing. Make sure to provide proof of these investments during the process.

What documents do I need to keep for claiming Section 80C deductions?

You need to keep proof of all eligible investments, such as receipts, bank statements, insurance premiums, tuition fee receipts, and home loan statements. These documents must be submitted while filing your ITR.

Can I claim both NPS and other 80C investments to maximize tax savings?

Yes, you can claim both the ₹1,50,000 deduction under Section 80C for eligible investments and the ₹50,000 additional deduction under Section 80CCD(1B) for NPS contributions, further maximizing your tax savings.

Does the ₹1,50,000 limit apply to all individuals or only certain taxpayers?

The ₹1,50,000 limit applies to all individual taxpayers and Hindu Undivided Families (HUFs) who qualify under Section 80C. Corporate bodies and other business entities are not eligible for this deduction.

What is the maximum limit of 80C in 2025?

Bhavika Rajput
Apr 30
7 min read

Updated: May 2

Section 80C of the Income Tax Act offers a valuable opportunity for individual taxpayers and Hindu Undivided Families (HUFs) to reduce their taxable income by investing in specified financial instruments and incurring eligible expenses. For the financial year 2025-26, the maximum limit of deduction under this section is ₹1,50,000. This deduction plays a critical role in tax planning by helping individuals save a significant amount of tax based on their investments and eligible expenditures. With a range of options available, taxpayers can strategically plan their finances to take full advantage of these tax-saving opportunities.

What is the Maximum Limit of 80C in 2025?
Is the ₹1,50,000 Limit Applicable in the New Tax Regime?
How Section 80C Works in the Old Tax Regime
Eligible Investments and Expenses Under Section 80C
Is There an Additional Deduction for NPS?
Tax Saving Potential with Section 80C in 2025
Claiming Your Section 80C Deductions
Conclusion
FAQs

What is the Maximum Limit of 80C in 2025?

Section 80C allows taxpayers to claim deductions on various investments and expenses, making it one of the most popular sections for tax-saving. The maximum limit under this section is ₹1,50,000, which applies to the aggregate of investments made across various instruments like Employee Provident Fund (EPF), Public Provident Fund (PPF), Life Insurance premiums, and more. This section also includes deductions on tuition fees, principal repayment on home loans, and certain other expenses, making it a broad-based deduction for taxpayers.

Key Changes

The maximum deduction limit under Section 80C for 2025 remains ₹1,50,000, consistent with previous years. However, one notable update is the introduction of an additional deduction for contributions made to the National Pension System (NPS) under Section 80CCD(1B), which is an added benefit for taxpayers. This change offers taxpayers an opportunity to claim an additional ₹50,000 deduction, which is separate from the ₹1,50,000 limit of Section 80C, boosting their overall tax savings.

Is the ₹1,50,000 Limit Applicable in the New Tax Regime?

Overview of the New Tax Regime

The new tax regime, introduced to simplify the tax structure, offers lower tax rates but does not allow the majority of exemptions and deductions available under the old regime. While this regime appeals to those seeking a simplified approach, taxpayers need to decide whether the lower tax rates outweigh the benefits of various deductions and exemptions offered in the old regime.

How Section 80C Works in the New Tax Regime

Under the new tax regime, the ₹1,50,000 limit under Section 80C does not apply. Taxpayers opting for the new tax regime will not be able to claim deductions under Section 80C. This means that while the new tax regime offers reduced tax rates, it comes at the cost of losing out on deductions such as investments in PPF, EPF, ELSS, and tuition fees, which are otherwise available under the old tax regime.

How Section 80C Works in the Old Tax Regime

Benefits for Taxpayers in the Old Regime

The old tax regime allows taxpayers to claim a deduction of ₹1,50,000 under Section 80C, along with a host of other exemptions and deductions. This regime is ideal for taxpayers who have significant investments in tax-saving instruments like EPF, PPF, NSC, and life insurance premiums, as it allows them to reduce their taxable income by up to ₹1,50,000. The old regime is particularly beneficial for those who seek to maximize their tax savings by utilizing deductions and exemptions.

Claiming Deductions under Section 80C

To claim deductions under Section 80C, individuals must invest in eligible instruments or incur specified expenses within the financial year. The total amount of deduction that can be claimed under Section 80C cannot exceed ₹1,50,000 in a given year. During the Income Tax Return (ITR) filing process, taxpayers are required to provide proof of investment or expenditure to substantiate their claim for deductions.

Eligible Investments and Expenses Under Section 80C

Common Investment Options (EPF, PPF, ELSS)

Employee Provident Fund (EPF): A mandatory retirement savings scheme for salaried employees, EPF contributions are eligible for deductions under Section 80C.
Public Provident Fund (PPF): PPF is a long-term investment option with a 15-year tenure. It offers tax-free returns and is eligible for tax deductions under Section 80C.
Equity Linked Savings Scheme (ELSS): ELSS is a tax-saving mutual fund that offers the dual benefit of tax deductions under Section 80C and potential capital appreciation.

Other Eligible Expenses (Life Insurance, Tuition Fees, Housing Loan Principal)

Life Insurance Premiums: Premiums paid for life insurance policies for the taxpayer, spouse, and children are eligible for deductions.
Tuition Fees: Payments made for children’s tuition fees are eligible under Section 80C. However, this applies to only two children.
Housing Loan Principal: The principal repayment of a home loan is also eligible for deduction under Section 80C, which can significantly reduce taxable income for those investing in real estate.

Is There an Additional Deduction for NPS?

Section 80CCD(1B) Overview

Section 80CCD(1B) allows an additional deduction of up to ₹50,000 for contributions made to the National Pension System (NPS). This is an added benefit for taxpayers who are looking to invest in their retirement while enjoying a tax deduction. This deduction is separate from the ₹1,50,000 limit under Section 80C and can further reduce taxable income.

How to Claim ₹50,000 Extra for NPS

To claim the additional ₹50,000 under Section 80CCD(1B), taxpayers must make contributions to NPS during the financial year. The contributions can be made directly or through an employer. This deduction applies to both salaried and self-employed individuals, offering an excellent opportunity for long-term retirement planning along with immediate tax savings.

Tax Saving Potential with Section 80C in 2025

Tax Savings for Different Income Slabs

Taxpayers in higher income brackets stand to benefit the most from Section 80C. For example, an individual in the 30% tax bracket can save up to ₹46,800 (30% of ₹1,50,000), whereas those in lower tax brackets will save proportionally less.

How Much Can You Save Based on Your Tax Bracket?

The amount of tax saved under Section 80C depends on the individual’s income tax slab. While the tax benefit for the maximum deduction of ₹1,50,000 is ₹46,800 for taxpayers in the highest slab, those in lower tax brackets (20% or 10%) will save a smaller amount, with ₹30,000 and ₹15,000 respectively.

Claiming Your Section 80C Deductions

How to Claim During ITR Filing

To claim deductions under Section 80C, individuals must provide proof of their investments or expenses while filing their Income Tax Return (ITR). This can include receipts, bank statements, or other relevant documents that show the amount invested in eligible instruments.

Documentation and Proof Requirements

Proof of investments made during the financial year, such as EPF statements, PPF receipts, insurance premiums, tuition fee receipts, and home loan statements, must be maintained and submitted during the ITR filing process. Failure to submit proper proof may lead to the rejection of claims for deductions under Section 80C.

Conclusion

Maximizing your Section 80C deductions requires strategic planning and timely investment. By carefully selecting eligible investments and expenses, taxpayers can ensure they take full advantage of the ₹1,50,000 deduction limit for 2025-26. Whether in the old tax regime or the new, understanding the benefits and claiming the deductions accurately can lead to significant tax savings for the year.

FAQs

What is the maximum limit for deductions under Section 80C in 2025?
The maximum limit for deductions under Section 80C for the financial year 2025-26 is ₹1,50,000. This applies to a combination of eligible investments and expenses within the financial year.
Can I claim Section 80C deductions in the new tax regime?
No, taxpayers opting for the new tax regime cannot claim deductions under Section 80C. The new regime offers lower tax rates but does not allow for deductions like those under Section 80C.
How does Section 80C apply in the old tax regime?
In the old tax regime, taxpayers can claim up to ₹1,50,000 as deductions under Section 80C. This applies to investments such as EPF, PPF, ELSS, and eligible expenses like tuition fees and housing loan principal repayments.
What types of investments are eligible under Section 80C?
Eligible investments under Section 80C include Employee Provident Fund (EPF), Public Provident Fund (PPF), Life Insurance premiums, National Savings Certificates (NSC), 5-year fixed deposits with banks or post offices, and Equity Linked Savings Schemes (ELSS).
Is there any additional deduction available for NPS contributions under Section 80C?
Yes, under Section 80CCD(1B), taxpayers can claim an additional ₹50,000 deduction for contributions made to the National Pension System (NPS), over and above the ₹1,50,000 limit under Section 80C.
How much tax can I save by investing in 80C instruments?
The tax savings depend on your income tax slab. For example, a taxpayer in the 30% tax bracket can save up to ₹46,800 by investing the full ₹1,50,000 in eligible Section 80C instruments, while savings would be lower for those in lower tax brackets.
Are tuition fees included under Section 80C for deductions?
Yes, tuition fees paid for up to two children’s education are eligible for deductions under Section 80C. This includes fees for elementary, secondary, and higher education.
Can I claim deductions on housing loan principal repayment under Section 80C?
Yes, the principal repayment of a housing loan is eligible for deduction under Section 80C, helping homeowners reduce their taxable income.
How do I file my ITR to claim Section 80C deductions?
To claim Section 80C deductions, you must include the details of your eligible investments and expenses in your Income Tax Return (ITR) while filing. Make sure to provide proof of these investments during the process.
What documents do I need to keep for claiming Section 80C deductions?
You need to keep proof of all eligible investments, such as receipts, bank statements, insurance premiums, tuition fee receipts, and home loan statements. These documents must be submitted while filing your ITR.
Can I claim both NPS and other 80C investments to maximize tax savings?
Yes, you can claim both the ₹1,50,000 deduction under Section 80C for eligible investments and the ₹50,000 additional deduction under Section 80CCD(1B) for NPS contributions, further maximizing your tax savings.
Does the ₹1,50,000 limit apply to all individuals or only certain taxpayers?
The ₹1,50,000 limit applies to all individual taxpayers and Hindu Undivided Families (HUFs) who qualify under Section 80C. Corporate bodies and other business entities are not eligible for this deduction.

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