Section 80C of Income Tax Act - 80C Deduction List
Section 80C deductions allow taxpayers to reduce their taxable income by investing in specified instruments or making eligible payments. Under Section 80C of the Income Tax Act, individuals and HUFs can claim deductions of up to Rs. 1.5 lakh for investments such as PPF, ELSS, life insurance premiums, NSC, home loan principal repayment, and children’s tuition fees.
Section 80C is one of the most widely used tax-saving provisions in India because it covers both investments and essential expenses. By strategically investing in eligible instruments, taxpayers can significantly lower their taxable income while building long-term savings.
However, deductions under Section 80C are available only under the old tax regime. Taxpayers opting for the new regime cannot claim these deductions.
List of Deductions Under Section 80C
The following investments and exepenses 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
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 |
| 80C | ELSS, PPF or EPF, life insurance premium, home loan principal, SSY, NSC, SCSS | Rs 1,50,000 |
| 80CCC | Contributions to pension funds | Rs 1,50,000 |
| 80CCD(1B) | Contributions to notified pension schemes such as Atal Pension Yojana | Employed: 10% of basic salary + DA Self-employed: 20% of gross total income |
| 80CCE | Combined limit for 80C, 80CCC & 80CCD(1) | Rs 1,50,000 |
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% | Till 60 years of age | High |
| 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.
Current Limitations
The ceiling limit of Rs. 1.5 lakh was fixed in the year 2014, more than 10 years now. More often than not, taxpayers and professionals alike opine that the aforesaid limit is quite outdated. Investments in very few options easily exhausts the maximum limit. Therefore, a relaxation of limits will help taxpayers to optimize tax deductions and maximize their returns.
Are 80C Allowed under the New Regime?
No, deductions under Section 80C are not available if a taxpayer opts for the new tax regime. Taxpayers can claim deductions under Section 80C of the Income Tax Act only when they opt for the old tax regime.
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.
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.
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