Section 80C of the Income Tax Act lets you deduct up to ₹1,50,000 from your taxable income every financial year - it is the single most popular tax-saver in India. The catch most people miss: 80C applies in the old tax regime only. From FY 2025-26 the new regime is the default, and it does not allow 80C at all. So before you rush to invest, the first question is always: which regime is cheaper for me?
This guide covers every investment and expense that counts towards the ₹1.5 lakh limit, the extra deductions that sit on top of it (80CCD(1B) for NPS and 80D for health insurance), and - most importantly - exactly how much tax each rupee of 80C saves at your slab.
Quick summary
- Limit: ₹1,50,000 combined across all 80C instruments.
- Plus NPS: an extra ₹50,000 under 80CCD(1B) → up to ₹2 lakh total.
- Plus health cover: ₹25,000–₹1,00,000 under 80D (separate again).
- Regime: old regime only - the new regime ignores all of these.
- Max tax saved: up to ₹46,800 from 80C alone in the 30% slab.
Investments that qualify for 80C
The following are the most common instruments that count towards your ₹1.5 lakh. Each behaves very differently on lock-in, risk and returns, so the right mix depends on your goals - not just on saving tax.
| Instrument | Lock-in | Returns (indicative) | Risk |
|---|---|---|---|
| EPF (employee share) | Till retirement / job change | ~8.25% | Very low |
| PPF | 15 years | ~7.1% | Very low (govt) |
| ELSS mutual funds | 3 years | Market-linked | High (equity) |
| 5-yr tax-saving FD | 5 years | ~6.5–7.5% | Low |
| NSC | 5 years | ~7.7% | Very low (govt) |
| Sukanya Samriddhi | 21 yrs / till marriage | ~8.2% | Very low (govt) |
| Life insurance premium | Policy term | Varies | Low–medium |
| ULIP | 5 years | Market-linked | Medium–high |
| NPS (Tier-I) | Till age 60 | Market-linked | Medium |
A few notes that trip people up:
- EPF - only your contribution counts; the employer's matching share does not fall under 80C.
- Life insurance - premium qualifies for self, spouse and children. To get the full deduction the annual premium should not exceed 10% of the sum assured (for policies issued after April 2012).
- ELSS - has the shortest lock-in (3 years) and the highest growth potential, but returns are not guaranteed.
Expenses that qualify for 80C
It is not only investments - several everyday expenses count too, and many taxpayers forget to claim them:
- Home loan principal repayment (the interest is claimed separately under Section 24).
- Children's tuition fees - full-time education in India, for up to two children. Tuition only; not donations, transport or hostel fees.
- Stamp duty & registration charges on buying a house (in the year of purchase).
See how much tax your 80C investments actually save - at your exact income.
Calculate your saving →How much tax does 80C actually save?
A deduction reduces your taxable income, so the rupees you save depend on your marginal slab in the old regime. The table below shows the tax saved on a full ₹1.5 lakh 80C claim (including 4% health & education cess):
| Your slab (old regime) | Rate + cess | Tax saved on ₹1.5 lakh |
|---|---|---|
| ₹2.5L – ₹5L | 5.2% | ₹7,800 |
| ₹5L – ₹10L | 20.8% | ₹31,200 |
| Above ₹10L | 31.2% | ₹46,800 |
Add the ₹50,000 NPS deduction in the 30% slab and you save a further ₹15,600 - so the full ₹2 lakh of 80C + 80CCD(1B) is worth up to ₹62,400 a year.
Worked example
Riya earns a basic salary that puts her in the 30% old-regime slab. During the year she contributes:
- EPF (her share): ₹60,000
- Term life insurance premium: ₹15,000
- Children's school tuition fees: ₹40,000
- ELSS investment: ₹35,000
Total = ₹1,50,000 - exactly the 80C cap. Her taxable income drops by ₹1.5 lakh, saving her ₹46,800 in tax. She then puts ₹50,000 into NPS under 80CCD(1B), saving another ₹15,600. Total tax saved: ₹62,400. Note how much of her limit was already filled by EPF and insurance she was paying anyway - a common reason not to over-invest just for 80C.
Beyond 80C: two deductions worth knowing
80CCD(1B) - extra ₹50,000 for NPS
On top of the ₹1.5 lakh 80C limit, you can claim an additional ₹50,000 for NPS Tier-I contributions. This makes the combined tax-saving headroom ₹2 lakh. NPS locks in until age 60, so treat it as a retirement product, not a short-term saver.
80D - health insurance
Premiums for health insurance are deducted separately under Section 80D - up to ₹25,000 for self and family, or ₹50,000 if you (or the insured parents) are senior citizens. Cover for both yourself and senior-citizen parents can take the 80D deduction up to ₹1,00,000.
Old vs new regime: should you even use 80C?
This is the decision that matters most. The new regime gives lower slab rates and a larger rebate but disallows 80C, 80D and HRA. The old regime keeps those deductions but taxes at higher rates. As a rough rule of thumb: if your total deductions (80C + 80D + HRA + home-loan interest) are large - typically above ₹3.5–4 lakh - the old regime often wins. If they are small, the new regime is usually cheaper. Don't guess - compare both regimes side by side or run your exact numbers through our calculator.
Smart tips
- Check your existing EPF and insurance premiums first - they may already fill most of the ₹1.5 lakh.
- Match the instrument to your goal: ELSS for growth, PPF/SSY for safe long-term, FD/NSC for capital protection.
- Invest through the year, not in a last-minute March rush.
- Remember 80C only helps in the old regime - confirm your regime choice before investing purely to save tax.
Frequently asked questions
Is Section 80C available in the new tax regime?
No. Section 80C - along with 80CCD(1B), 80D and HRA - is allowed only in the old regime. The new regime (the default from FY 2025-26) gives lower slab rates and a higher rebate instead, but disallows these deductions. If your deductions are large, compare both regimes before deciding.
What is the maximum deduction under Section 80C?
₹1,50,000 per financial year. This is a single combined ceiling across all eligible instruments and expenses - you cannot exceed ₹1.5 lakh no matter how many you use.
Can I claim more than ₹1.5 lakh by adding NPS?
Yes. Section 80CCD(1B) adds ₹50,000 for NPS Tier-I contributions on top of the ₹1.5 lakh 80C limit, taking the combined headroom to ₹2 lakh. Health insurance under 80D is separate again.
How much tax does ₹1.5 lakh of 80C actually save?
It depends on your slab. A full claim saves about ₹7,800 in the 5% slab, ₹31,200 in the 20% slab, and ₹46,800 in the 30% slab (including 4% cess).
Does my EPF contribution count towards 80C?
Yes - your own (employee) EPF contribution counts towards the ₹1.5 lakh limit. The employer's matching contribution does not count under 80C. EPF plus a term-insurance premium often fills a big chunk of the limit already.
Which 80C investment has the shortest lock-in?
ELSS mutual funds, at just 3 years. Tax-saving FDs and NSC lock in for 5 years, and PPF for 15 years.