Quick Answer: Section 80C allows a deduction of up to ₹1.5 lakh per year under the Old Tax Regime on investments in EPF, PPF, ELSS, NSC, tax-saving FD (5 years), life insurance premiums, home loan principal repayment, SSY, NPS Tier-II (central govt employees), tuition fees, etc. This deduction is not available under the New Tax Regime.
Section 80C Investments — Complete Guide FY 2025-26
Section 80C is the most widely used tax-saving provision in India. Under the Old Tax Regime, it allows deductions up to ₹1.5 lakh per year. The key rule: it is a single overall cap — not ₹1.5L for each sub-investment. Exceeding ₹1.5L in total 80C investments does not give additional benefit.
Best 80C Investment Options Compared
| Investment | Lock-in | Returns | Tax on Returns |
|---|---|---|---|
| ELSS Mutual Fund | 3 years | Market-linked (~12–15%) | LTCG >₹1.25L taxed at 12.5% |
| PPF | 15 years | 7.1% p.a. (tax-free) | EEE (fully exempt) |
| EPF | Till retirement | 8.25% (FY25-26) | Exempt (if ≤ ₹2.5L/yr) |
| NSC | 5 years | 7.7% p.a. | Taxable as interest |
| 5-Year FD | 5 years | 6.5–7.5% | Fully taxable |
| SSY (Sukanya) | 21 years | 8.2% p.a. | EEE (fully exempt) |
Frequently Asked Questions
Section 80CCD(1B) provides an additional deduction of up to ₹50,000 for contributions to the National Pension System (NPS Tier-1). This is over and above the ₹1.5L under Section 80C, making total deduction potential ₹2 lakh (80C + 80CCD(1B)).
ELSS offers the shortest lock-in (3 years) and highest potential returns among 80C options. PPF is ideal for risk-free, fully tax-exempt wealth accumulation. High earners should also maximise 80CCD(1B) NPS for an extra ₹50,000 deduction.