Section 80C of Income Tax Act - 80C Deduction List
Section 80C is one of the most popular tax saving deductions, allowing both individuals and HUFs to claim up to Rs. 1.5 lakh deduction per financial year. It covers a variety of investments and payments such as PPF, ELSS, life insurance premiums, NSC, EPF, Sukanya Samriddhi Yojana and, home loan principal repayment, and tuition fees.
Key Highlights
- Section 80C deduction is available only under the old tax regime.
- Additional Rs. 50,000 deduction can be claimed u/s 80CCD(1B) on contribution to specified pension funds.
- Parallel provisions in the Income Tax Act, 2025 are dealt under section 123 of the act.
What is Section 80C Deductions?
Section 80C is a deduction against total income, allowing you to reduce the taxable income up to a Rs. 1.5 lakhs. This means that the deduction is against income, not the final tax outlay. It offers tax savings against various government backed investments, saving schemes, and other crucial payments such as tution fees, home loan repayment.
The aforesaid deduction limit applies to the cumulative investment amount, not amount contributed against each investment/payment. Irrespective of the amount of investments, the maximum limit is fixed at Rs. 1.5 lakhs.
Section 80C deduction is available only under the old regime. Taxpayers opting for the new tax regime are not eligible for this deduction.
Section 80C - Income Tax Act 2025 Updates
As mentioned in Budget 2026, the new Income Tax Act 2025 came into effect from 1st April 2026 and will be applicable for Tax Year 2026-27 and onwards. The Income Tax Act 2025 revamps the direct tax structure with simplified language and new sections to ensure uniformity. All deductions under Section 80C, 80CCC, and 80CCC(1) have been combined under a single Section 123 read with schedule XV.
The deductions remain to be allowed only under the old tax regime. Thus, taxpayers opting for the new tax regime will not be allowed to claim such tax deductions even under the Income Tax Act 2025.
Though the Income Tax Act 2025 takes effect from 01st April 2026, the provisions of the 1961 act applies for AY 2026-27, as it pertains to income earned up to 31st March, 2026.
Below is the comparison of the Income Tax Act 1961 Act with those in the Income Tax Act 2026.
Topic The Income Tax Act 1961 The Income Tax Act 2026 Investments and eligible payment deductions Section 80 C Section 123 read with schedule XV Contribution to prison/ annuity fund of LIC or insurer Section 80 CCC Section 123 read with Schedule XV Employee NPS contribution (within 1.5 Lakh Rupee limit) Section 80 CCD(1) Section 123 read with Schedule XV Additional NPS contribution over and above 1.5 Lakh Rupee) Section 80 CCD(1B) Section 124(3) Combined ceiling for section 80C+80CCC+80CCD(1) Section 80 CCE Section 123 Deductions reported in ITR under Chapter VI-A Chapter VI-A Chapter VIII (Section 122 onwards)
Section 80C Deductions List - FY 2025-26
The following investments and expenses can be claimed as Section 80C Deductions:
- Life insurance premium payments
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF) contributions
- Equity Linked Savings Scheme (ELSS) mutual funds
- National Savings Certificate (NSC)
- Sukanya Samriddhi Yojana (SSY)
- 5 year tax-saving fixed deposits
- Senior Citizen Savings Scheme (SCSS)
- Home loan principal repayment
- Stamp duty and registration charges on property purchase
- Tuition fees paid for up to two children
However, a combined deduction of up to Rs. 1.5 lakh is allowed for the above investments and expenses.
Maximum Section 80C Deduction Limit - FY 2025-26
The maximum deduction available under Section 80C is Rs. 1,50,000 per financial year. This limit is applicable to the total combined amount invested across all eligible instruments and expenses.
For example, if a taxpayer invests:
- Rs. 60,000 in PPF
- Rs. 50,000 in ELSS
- Rs. 60,000 in life insurance premiums
The total deduction allowed will be Rs. 1.5 lakh, which is the maximum allowed under Section 80C and not he actual Rs. 1.7 lakh invested.
However, you can claim an additional deduction of Rs. 50,000 under Section 80CCD(1B) for contributions made to the National Pension Scheme (NPS). Therefore, the total maximum deduction available under Sections 80C, 80CCC, 80CCD(1), and 80CCD(1B) is Rs. 2 lakh.
| Sections | Eligible investments for tax deductions | Maximum Deduction | Part of the combined limit u/s 80CCE? |
| 80C | ELSS, PPF or EPF, life insurance premium, home loan principal, SSY, NSC, SCSS | Rs 1,50,000 | Yes |
| 80CCC | Contributions to pension funds | Rs 1,50,000 | Yes |
| 80CCD(1) | Employee's contribution to NPS | Rs 1,50,000 | Yes |
| 80CCD(1B) | Contributions to notified pension schemes such as Atal Pension Yojana | Rs. 50,000, subject to conditions | No - this is additional deduction |
Popular Section 80C investment options
The following table compares the various features of section 80C deduction options, easy for taxpayers to choose the most suitable option for them.
| Investment options | Average Interest | Lock-in period | Risk factor |
| ELSS funds | 12% – 15% | 3 years | High |
| NPS Scheme | 8% – 10% (market linked) | Till 60 years of age | Depends on choice of fund |
| NPS Vatsalya Scheme | 9.5% to 10% (market linked) | Up to 18 years (converts into standard NPS account afterwards) | Depends on choice of fund |
| ULIP | 8% – 10% | 5 years | Medium |
| Tax saving FD | Up to 8.40% | 5 years | Low |
| PPF | 7.90% | 15 years | Low |
| Senior citizen savings scheme | 8.60% | 5 years (can be extended for other 3 years) | Low |
| National Savings Certificate | 7.90% | 5 years | Low |
| Sukanya Samriddhi Yojana | 8.50% | Till girl child reaches 21 years of age (partial withdrawal allowed when she reached 18 years) | Low |
The maximum section 80C deduction limit is Rs. 1.5 lakh per Financial Year for all the above deductions combined.
Who can claim Section 80C Deductions?
Only individuals and HUFs are eligible to claim Section 80C deductions. Companies, Firms, LLPs, etc. are not allowed to claim the Section 80C deductions.
How to Save Tax under Section 80C?
Let us understand how section 80C helps in reducing tax implications using an example.
Mr. A has a salary income of Rs. 10 lakhs and other income of Rs. 1 lakh. He has invested Rs. 1.5 lakh in PPF.
The difference in tax implications when 80C deductions are claimed and not claimed is explained below:
| Particulars | Section 80C Deduction claimed | Section 80C Deduction not claimed |
| Salary Income | 10,00,000 | 10,00,000 |
| Less - Standard Deduction | (50,000) | (50,000) |
| 9,50,000 | 9,50,000 | |
| Other Income | 1,00,000 | 1,00,000 |
| Gross Total Income | 10,50,000 | 10,50,000 |
| Less - Section 80C deduction | (1,50,000) | - |
| Taxable Income | 9,00,000 | 10,50,000 |
| Total Tax payable (including cess) | 96,200 | 1,32,600 |
Therefore, by claiming a deduction of Rs. 1.5 lakh under Section 80C, Mr. A has saved Rs. 36,400 in taxes under the old tax regime.
Use ClearTax's free Income Tax Calculator to optimise tax savings and determine taxes.
How to claim Section 80C Deductions?
It is important to understand and comply with the following points to claim Section 80C deductions:
- Invest in eligible instruments before 31st March of the financial year.
- Collect proofs such as deposit slips, insurance premium receipts, ELSS statements, etc.
- Declare investments to your employer to adjust TDS.
- File ITR and report investments under “Deductions under Chapter VI-A”.
You can use ClearTax tax filing tool to help you claim deductions and ensure easy tax filing and compliance. Our tax experts can make your tax filing simpler.
ELSS Funds Deduction Under Section 80C
Equity Linked Savings Scheme (ELSS) is a tax saving mutual fund that invests primarily in equity. Investments in ELSS qualifies for tax deductions under Section 80C.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | 3 years |
| Type of Investment | Equity market linked |
| Tax on Returns | Long-term capital gains (LTCG) tax applicable above Rs. 1.25 lakh |
| Best Suited For | Investors seeking tax saving with long-term wealth creation |
PPF Deduction Under Section 80C
Public Provident Fund (PPF) is a government backed savings scheme that offers tax deduction under Section 80C along with low risk long term returns.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | 15 years |
| Type of Investment | Fixed income (government-backed) |
| Tax on Returns | Completely tax free |
| Best Suited For | Conservative investors seeking long-term tax saving and wealth creation |
EPF Deduction Under Section 80C
Employee Provident Fund (EPF) is a retirement savings scheme for salaried employees that qualifies for tax benefit under Section 80C.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | Till retirement (partial withdrawals allowed under conditions) |
| Type of Investment | Fixed income (government-backed retirement fund) |
| Tax on Returns | Tax-free if conditions are met |
| Best Suited For | Salaried individuals planning for long-term retirement savings |
NSC Deduction Under Section 80C
National Savings Certificate (NSC) is a government backed fixed income investment scheme that is allowed as tax deduction under Section 80C.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | 5 years |
| Type of Investment | Fixed income (government-backed) |
| Tax on Returns | Interest is taxable |
| Best Suited For | Conservative investors looking for safe investment with tax benefits |
Sukanya Samriddhi Yojana Deduction Under Section 80C
Sukanya Samriddhi Yojana (SSY) is a government backed savings scheme specifically designed for girl children. Taxpayers with a girl child can start investing in this scheme. Investment in SSY is allowed as tax deductions under Section 80C.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | Till the girl child turns 21 years (partial withdrawal allowed after 18) |
| Type of Investment | Fixed income (government-backed) |
| Tax on Returns | Completely tax free |
| Best Suited For | Parents or guardians planning long-term savings for a girl child’s education or marriage |
SCSS Deduction Under Section 80C
Senior Citizen Savings Scheme (SCSS) is a government backed savings scheme for senior citizen taxpayers that offers tax savings deductions under Section 80C.
| Particulars | Details |
| Tax Deduction Limit | Up to Rs. 1.5 lakh per year under Section 80C |
| Lock-in Period | 5 years (extendable by 3 years) |
| Type of Investment | Fixed income (government-backed) |
| Tax on Returns | Interest is taxable |
| Best Suited For | Senior citizens seeking regular income with tax benefits |
Old Tax Regime vs New Tax Regime: Section 80C Deduction
Section 80C deduction is optimal for taxpayers opting to file taxes under the old tax regime, as taxpayers can benefit from tax deductions of up to Rs.1.5 lakh which reduces the taxable income significantly.
However, for taxpayers opting for the new tax regime, Section 80C deductions are not allowed. Taxpayers having made eligible investments and expenses will still not be allowed deduction under Section 80C. Therefore, it is important to plan taxes and opt for the better tax regime depending on the taxpayer's income.
How to Maximise Section 80C Deductions?
- Start investing early in the financial year to benefit from compounding and avoid last minute decisions or investments.
- Utilise the entire Rs. 1.5 lakh limit to maximise tax deduction and savings.
- Diversify across various investment schemes like Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), and National Savings Certificate (NSC) to balance risk and returns.
- Claim the additional Rs. 50,000 deduction under Section 80CCD(1B) by investing in National Pension Scheme. This can increase your total deduction limit up to Rs. 2 lakh.
- Make sure all investments have been made under the taxpayer's name and relevant documents are available at time of ITR filing.
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