Section 80C of the Income-tax Act allows a deduction of up to ₹1,50,000 per financial year for specified investments and payments. That number has not changed since 2014-15, which means its real value erodes every year. Even so, for old-regime taxpayers it remains the single biggest deduction lever.
What qualifies
- Employee provident fund (EPF) contribution deducted from salary.
- Public provident fund (PPF) — current interest rate reviewed quarterly. Tenure 15 years, extendable in blocks of 5.
- Equity-linked savings scheme (ELSS) mutual funds — 3-year lock-in, the shortest among 80C options.
- Life insurance premium for self, spouse or children.
- Principal repayment on a home loan, plus stamp duty and registration charges paid that year.
- Sukanya Samriddhi Account for a girl child under 10.
- Tuition fees paid for up to two children (fees, not donations or capitation).
- 5-year bank tax-saver fixed deposits and 5-year post-office time deposits.
- National Savings Certificate (NSC).
- Senior Citizen Savings Scheme (SCSS) — for taxpayers 60+.
What does not qualify
ULIPs launched after 1 Feb 2021 with an annual premium above ₹2.5 lakh lose their tax-free maturity status. Term insurance premium is covered under 80C but the cover itself is what matters — do not buy investment-linked insurance to save tax.
How we sequence the year
- April — set the year's 80C plan. If you have an EPF deduction, calculate what is left of the ₹1.5 lakh ceiling and fill that with ELSS or PPF.
- Each month — SIP into ELSS rather than a March rush. The lock-in is per SIP instalment, so monthly SIPs mature in sequence.
- January — top up if anything is pending. Pay PPF in one shot before the 5th of April next year to maximise the interest on the current year.
Old regime versus new regime
80C is only available under the old regime. For FY 2025-26 and later, the new regime offers a rebate that makes income up to ₹12 lakh effectively tax-free, without any deductions. For taxpayers in that range, 80C may not help at all. Run both regimes through the Paise Ki Pathshala tax calculator before you commit money you cannot easily withdraw.
The honest ranking
If you are under 40, have an emergency fund, and are in the old regime, ELSS is the default 80C vehicle — highest long-term expected return, lowest lock-in. PPF is the default if you want guaranteed, tax-free returns and do not need the money for 15 years. NPS tier 1 under section 80CCD(1B) adds an additional ₹50,000 of deduction on top of 80C, and is worth considering for long-horizon investors already comfortable with equity exposure.