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Income Tax · ReturnsSection 80C deductions: eligible investments, limits and common errors
Section 80C is India's best-known tax deduction – ₹1.5 lakh a year for investments and certain expenses. Under the Income-tax Act, 2025 it continues as Section 123, but only in the old regime. Here is what qualifies, the lock-ins, and the errors that lead to disallowance.
Section 80C of the Income-tax Act, 1961 allows individuals and HUFs to deduct up to ₹1,50,000 a year from gross total income for specified investments and payments. Under the Income-tax Act, 2025 the same deduction is in Section 123 (merging old 80C, 80CCC and 80CCD(1)), with the same ₹1.5 lakh overall cap. It is available only in the old tax regime.
What qualifies
| Item | Key conditions | Lock-in |
|---|---|---|
| Employee's contribution to EPF / VPF | Through salary | Until retirement / as per EPF rules |
| Public Provident Fund (PPF) | Max ₹1.5 lakh a year; self, spouse, children | 15 years (partial withdrawal from year 7) |
| ELSS mutual funds | Equity-linked savings scheme | 3 years |
| Life insurance premium | Self, spouse, children; premium within 10% of sum assured for policies after 1 April 2012 | Policy must continue 2 years |
| Sukanya Samriddhi Yojana | Girl child up to 10 years | Till age 21 / marriage after 18 |
| National Savings Certificate (NSC) | Post office | 5 years |
| 5-year tax-saving bank FD | Scheduled bank | 5 years |
| Senior Citizens' Savings Scheme | Age 60+ | 5 years |
| Home-loan principal repayment | Residential house; stamp duty and registration also | Property not to be sold within 5 years |
| Tuition fees | Up to two children; full-time education in India | — |
| NPS – own contribution (old 80CCD(1)) | Within ₹1.5 lakh overall | Till 60 |
| Pension plans of LIC/insurers (old 80CCC) | Within ₹1.5 lakh overall | — |
The additional NPS deduction of ₹50,000 (old 80CCD(1B), now Section 124) is over and above ₹1.5 lakh.
Worked example
Example: Deepak, aged 38, in the old regime, has the following in FY 2025-26:
| Item | Amount | Allowed |
|---|---|---|
| EPF (employee share) | ₹86,400 | ₹86,400 |
| PPF | ₹30,000 | ₹30,000 |
| Life insurance premium (sum assured ₹10 lakh) | ₹25,000 | ₹25,000 |
| Children's school tuition fees (2 children) | ₹70,000 | ₹70,000 |
| Home-loan principal | ₹48,000 | ₹48,000 |
| Total | ₹2,59,400 | Capped at ₹1,50,000 |
| NPS own contribution under 80CCD(1B) | ₹50,000 | ₹50,000 (extra) |
Deepak has already crossed ₹1.5 lakh through EPF, tuition and home-loan principal. His PPF and LIC premiums give no extra tax benefit this year – useful to know before investing in March purely to save tax. At a 30% marginal rate plus cess, the full ₹2 lakh (₹1.5 lakh + ₹50,000 NPS) saves him ₹62,400.
When does 80C make the old regime worthwhile?
80C alone rarely makes the old regime better for incomes up to ₹15 lakh, because the new regime's lower slabs and ₹12 lakh rebate outweigh it. The old regime tends to win when 80C is combined with large HRA, home-loan interest (₹2 lakh) and 80D. Compare using our income tax calculator.
Reversal: when deductions are withdrawn
- Life insurance surrendered or lapsed within 2 years – earlier deductions are taxed in the year of termination.
- House property sold within 5 years of possession – principal deductions claimed are added back.
- ULIP terminated within 5 years – deductions reversed.
- Tax-saving FD broken before 5 years – deduction reversed.
Proof and timing
- The investment must be made between 1 April and 31 March of the year.
- Submit proofs to your employer by the cut-off (usually January/February) to reduce TDS. If missed, claim in the return with evidence.
- Keep receipts – PPF passbook, premium receipts, tuition fee receipts with the institution's name, and home-loan certificates.
Common mistakes
- Claiming tuition fees for coaching or for a spouse.
- Counting the employer's PF contribution.
- Claiming premiums for parents' or siblings' life insurance – only self, spouse and children qualify.
- Investing in March without checking that EPF and tuition already exhaust the limit.
- Claiming 80C in the new regime return.
Key takeaway
Section 80C (now Section 123) remains a ₹1.5 lakh deduction for the old regime. Check how much of it is already used by EPF, tuition fees and home-loan principal before buying more products to save tax. For regime planning based on your actual figures, contact our tax planning team.
Official references
Provisions discussed (summaries in our Law Library):
- Income-tax Act, 2025 – Section 123 (corresponds to 80C / 80CCC / 80CCD(1)): Deduction – investments (₹1.5 lakh)
- Income-tax Act, 1961 – Section 80C / 80CCC / 80CCD(1) (corresponds to 123): Deduction – investments (₹1.5 lakh)
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
What is the new section number for 80C?
Section 123 of the Income-tax Act, 2025, which also covers what were Sections 80CCC and 80CCD(1). The combined limit remains ₹1.5 lakh.
Can I claim 80C in the new tax regime?
No. The deduction is available only if you opt for the old regime.
Does the employer's PF contribution count for 80C?
No. Only your own (employee's) contribution to EPF qualifies. The employer's contribution is a separate item and may be taxable above prescribed limits.
Can I claim tuition fees for my child's coaching classes?
No. Tuition fees qualify only when paid to a university, college, school or other educational institution in India for full-time education of up to two children. Coaching, transport and development fees do not qualify.
Is ELSS the shortest lock-in under 80C?
Yes, ELSS mutual funds have a three-year lock-in, the shortest among 80C options.
Is the stamp duty on a new house covered by 80C?
Yes. Stamp duty, registration fee and transfer expenses for a residential house qualify within the ₹1.5 lakh limit in the year of payment, in the old regime.
Can an HUF claim 80C?
Yes. An HUF can claim for life insurance on any member, PPF in the HUF's name (opened before restrictions) and certain other investments, within ₹1.5 lakh.
Does a Sukanya Samriddhi deposit for a niece qualify?
No. Only deposits for your own daughter (as parent or legal guardian) qualify.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
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