Section 80C: ₹1.5 Lakh Tax Deduction in India
Section 80C of the Income Tax Act 1961 allows individuals and Hindu Undivided Families (HUFs) to claim up to ₹1.5 lakh deduction from gross total income each financial year for specified investments and expenses, available only under the old tax regime.
Eligible instruments under 80C include: Employees' Provident Fund (EPF) employee contribution, Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS) mutual funds, National Savings Certificate (NSC), 5-year tax-saving fixed deposits, life insurance premiums (for self, spouse, children), Sukanya Samriddhi Yojana, principal repayment on home loan, tuition fees for up to 2 children, and Senior Citizens Savings Scheme. The combined limit across all instruments is ₹1.5 lakh.
Section 80C is available only under the old tax regime. Under the new regime (default from FY 2023-24, expanded slabs from FY 2025-26), 80C deductions are not available, but standard deduction (₹75,000 for salaried under new regime in FY 2025-26 onwards) and lower slab rates apply. Individuals choose regime each year via Form 10-IEA (business income) or directly in ITR (salaried).
Effective tax saving from 80C depends on slab: in 30% bracket, ₹1.5 lakh deduction = ₹45,000 tax saved; in 20%, ₹30,000; in 5%, ₹7,500. ELSS has the shortest lock-in (3 years) among 80C instruments and offers equity exposure. PPF has 15-year tenure with EEE (Exempt-Exempt-Exempt) treatment. EPF mandatory contributions count toward 80C automatically for salaried employees.
Section 80C limit of ₹1.5 lakh has been unchanged since FY 2014-15 despite inflation. Combined with 80CCD(1B) for NPS (additional ₹50,000) and 80D (health insurance), total deductions can reach ₹2.25 lakh+ under old regime. New regime taxpayers cannot claim these but get lower slabs and higher standard deduction.
