Table of Contents
Table of Contents
Last updated: 11 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Section 80C is the most widely used tax-saving deduction. It allows individuals and Hindu undivided families (HUFs) to reduce their total income by up to ₹1,50,000 in a year by investing in, or paying for, specified items such as PPF, ELSS, life insurance, EPF, NSC, tax-saver fixed deposits, home loan principal and children’s tuition fees. It is available only under the old tax regime.
Section 80C is a deduction from gross total income, not from the tax itself. If your taxable income falls by ₹1.5 lakh, the tax saved is that amount multiplied by your slab rate (plus cess).
The limit is one combined limit. If you invest ₹60,000 in PPF, ₹50,000 in ELSS and pay ₹60,000 as life insurance premium, the total is ₹1,70,000 but only ₹1,50,000 is allowed.
The Income-tax Act, 2025 applies from 01/04/2026, that is from Tax Year 2026-27. Income earned up to 31/03/2026 (FY 2025-26, assessment year 2026-27) is still taxed under the 1961 Act, so section 80C continues to apply to the return you file for that year. The deduction is retained in the new Act under section 123, read with Schedule XV, with the same ₹1.5 lakh limit and the same old regime condition.
| Item | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Specified savings and payments | Section 80C | Section 123 read with Schedule XV |
| Pension fund contribution to LIC or an insurer | Section 80CCC | Section 123 read with Schedule XV |
| Employee’s NPS contribution | Section 80CCD(1) | Section 124 (within the combined limit) |
| Additional NPS contribution | Section 80CCD(1B) | Section 124(3) |
| Deductions chapter | Chapter VI-A | Chapter VIII |
A home loan principal or stamp duty deduction is reversed if the house is sold within 5 years of getting possession.
| Section | What it covers | Limit | Inside the ₹1.5 lakh combined limit? |
|---|---|---|---|
| 80C | Investments and payments listed above | ₹1,50,000 | Yes |
| 80CCC | Contribution to a pension fund of an insurer | ₹1,50,000 | Yes |
| 80CCD(1) | Employee’s NPS contribution | ₹1,50,000 | Yes |
| 80CCD(1B) | Own contribution to NPS (including Atal Pension Yojana) | ₹50,000 | No, it is additional |
So the largest deduction from these sections together is ₹2,00,000.
The rates below are the government-notified rates for October to December 2026. They are revised every quarter, so check the current rate before you invest.
| Option | Return | Lock-in | Risk |
|---|---|---|---|
| PPF | 7.1% a year, interest tax-free | 15 years | Low |
| NSC | 7.7% a year, interest taxable | 5 years | Low |
| Sukanya Samriddhi Yojana | 8.2% a year, interest tax-free | 21 years from opening (part withdrawal allowed after 18 for education or marriage) | Low |
| SCSS (age 60 or more) | 8.2% a year, interest taxable | 5 years, extendable by 3 | Low |
| Tax-saver FD | Set by the bank, interest taxable | 5 years | Low |
| ELSS | Market linked, no assured return | 3 years | High |
| ULIP | Market linked | 5 years | Medium |
| EPF | Declared yearly by EPFO | Until retirement, with conditions | Low |
Gains on ELSS held more than a year are taxed at 12.5% on the amount above ₹1.25 lakh in a year.
Only individuals and HUFs. Companies, firms and LLPs cannot. Some items, such as tuition fees and NPS, are for individuals only.
Mr A has a salary of ₹10,00,000 and other income of ₹1,00,000, and invests ₹1,50,000 in PPF. He is under the old regime.
| Particulars | With 80C | Without 80C |
|---|---|---|
| Salary | 10,00,000 | 10,00,000 |
| Less: standard deduction | (50,000) | (50,000) |
| Other income | 1,00,000 | 1,00,000 |
| Gross total income | 10,50,000 | 10,50,000 |
| Less: section 80C | (1,50,000) | - |
| Taxable income | 9,00,000 | 10,50,000 |
| Tax including 4% cess | 96,200 | 1,32,600 |
Section 80C saves Mr A ₹36,400. The old regime slabs are unchanged for Tax Year 2026-27.
The new regime has lower slab rates but does not allow 80C. If your total deductions (80C, 80D, HRA, home loan interest and others) are large, the old regime may still cost less. Work out both before choosing.
₹1,50,000 in a financial year, as a combined limit for all eligible investments and payments.
No. It can be claimed only if you opt for the old tax regime.
Individuals and Hindu undivided families. Companies, firms and LLPs cannot.
Section 123 of the Income-tax Act, 2025, read with Schedule XV, applies from Tax Year 2026-27.
Yes, up to ₹50,000 more for NPS contributions under section 80CCD(1B), which is outside the ₹1.5 lakh limit.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.