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Section 80C of the Income Tax Act allows a deduction of up to ₹1.5 lakh per financial year against a wide basket of investments and expenses. It remains the most-used deduction by salaried taxpayers who opt for the old regime.
This guide compares the popular 80C options on returns, lock-in and taxation so you can plan smartly for AY 2026-27.
Eligible 80C investments and expenses
- EPF and VPF contributions
- Public Provident Fund (PPF) — 15-year lock-in, tax-free interest
- Equity Linked Savings Scheme (ELSS) — 3-year lock-in, market-linked returns
- Life insurance premium (up to 10% of sum assured)
- National Savings Certificate (NSC)
- 5-year tax-saving fixed deposits
- Sukanya Samriddhi Yojana for girl child
- Home loan principal repayment
- Tuition fees for up to two children
- Stamp duty and registration on new home
Quick comparison
- PPF — ~7-8% tax-free, 15-year lock-in, EEE
- ELSS — market-linked, 3-year lock-in, LTCG 10% above ₹1 lakh
- EPF — ~8%, till retirement, EEE (up to limits)
- NPS (80CCD(1B) extra) — market-linked, till 60, partial taxable at withdrawal
- 5-yr Tax-saver FD — ~6-7%, interest fully taxable
A simple planning framework
Start with EPF, home loan principal and life insurance you already pay — these often use up a large part of the ₹1.5 lakh limit. Fill the balance with ELSS for higher long-term returns and PPF for guaranteed safety. If you are risk-averse, tilt more to PPF; if you are young and can hold, tilt to ELSS.
Also consider the additional ₹50,000 under Section 80CCD(1B) for NPS — a separate limit over and above 80C.
Common mistakes
- Buying ULIPs or endowment policies only for tax saving with poor returns
- Ignoring the new tax regime — 80C is not available there
- Investing at the last minute in March without a plan
- Not maintaining proof of investment for TDS with employer
Frequently asked questions
Can I claim 80C in the new regime?
No. The new tax regime disallows 80C, 80D, HRA and most other deductions in exchange for lower slab rates.
Is home loan principal really covered under 80C?
Yes, principal repayment on a housing loan for a self-occupied or let-out property qualifies under 80C, subject to the ₹1.5 lakh overall cap.
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