BAJAJ BROKING
July 29, 2025
7 mins read
When you begin planning your taxes, Section 80C of the Income Tax Act often becomes your starting point. It offers a structured way to reduce your taxable income by investing in eligible instruments or making certain payments. Whether you are salaried or self-employed, understanding how to utilise Section 80C can help you manage your income more efficiently. You may already be contributing to provident funds or paying life insurance premiums, which qualify under this section. However, knowing the full list of options, rules, and calculations gives you a clearer view of how much you can claim and how to optimise your investments for tax purposes.
Before exploring the benefits, you should first understand what is 80C in income tax. This section allows individual taxpayers and Hindu Undivided Families (HUFs) to claim deductions from their total income through specific investments or payments, up to a maximum of ₹1.5 lakh per financial year.
Aspect | Details |
Legal Basis | Section 80C of the Income Tax Act, 1961 |
Eligibility | Available to individuals and HUFs only |
Maximum Deduction | ₹1.5 lakh per financial year |
Investment Types | Includes insurance premiums, PPF, NSC, ELSS, and more |
Tax Regime | Benefits only available under the old tax regime |
You will find this deduction useful if you are planning to reduce taxable income without engaging in complex strategies. It promotes long-term savings while offering tax relief.
You can choose from a wide range of investments and expenses to claim deductions under Section 80C. Each one serves a different purpose—some promote long-term savings, while others relate to specific life goals. Understanding them helps you make informed decisions while remaining tax compliant.
If you are paying life insurance premiums for yourself, your spouse, or children, you can claim those amounts under Section 80C. The policy must be in your or your immediate family’s name and must follow the conditions set by the Income Tax Act. Premiums should not exceed 10 percent of the sum assured to qualify.
You can invest in a Public Provident Fund (PPF) account and claim up to ₹1.5 lakh per year under Section 80C. This long-term savings scheme offers tax-free returns and a lock-in period of 15 years. Contributions to your spouse’s or child’s PPF accounts are also eligible within the overall limit.
When you invest in specific NABARD rural bonds notified by the central government, you can claim a deduction under Section 80C. These instruments help in rural infrastructure development and offer you a low-risk investment option. Not all NABARD bonds qualify, so ensure your investment is in the eligible series.
ULIPs combine life insurance with market-linked investment options. If you purchase a ULIP for yourself or your dependent family members, the premiums paid are eligible for Section 80C deductions. However, tax benefits are subject to policy terms such as premium limits and holding periods.
The National Savings Certificate (NSC) is a fixed-income investment backed by the Indian government. If you invest in NSC through a post office, the amount qualifies for deduction under Section 80C. Interest earned is taxable but reinvested for the first four years, making it deductible as well.
Tax-saving fixed deposits with a five-year lock-in period offered by scheduled banks qualify for deductions under Section 80C. You should note that the interest earned is taxable, but the principal amount invested is deductible up to ₹1.5 lakh. Only individual accounts are eligible for this benefit.
Your contribution to the Employee Provident Fund (EPF) is automatically eligible for deduction under Section 80C. If you are salaried and contribute regularly to EPF through your employer, those contributions are counted towards the ₹1.5 lakh limit. It supports retirement planning through consistent savings.
Certain long-term infrastructure bonds notified by the government are eligible for deductions under Section 80C. These are often issued by government-backed institutions and carry specific tenure and investment limits. You need to ensure the bonds are notified for deduction eligibility before investing.
ELSS is a market-linked mutual fund with a lock-in period of three years. When you invest in ELSS, the amount qualifies for deduction under Section 80C. It suits investors like you seeking potential market returns with tax-saving benefits. However, returns are subject to market performance and taxable as capital gains.
If you are 60 years or older, you can invest in the Senior Citizens Savings Scheme (SCSS) and claim a deduction under Section 80C. This scheme provides regular interest payouts and a five-year term. It is especially useful for retired individuals aiming for a safe, fixed-income option.
When you repay the principal amount of a home loan, the portion paid during the financial year qualifies for deduction under Section 80C. This benefit is available for loans taken for residential property and applies to both self-occupied and let-out properties.
The stamp duty and registration charges you pay while purchasing a new house are eligible for Section 80C deduction. However, these expenses must be incurred for a newly purchased residential property. The deduction is allowed only in the year these expenses are paid.
If you are investing in a Sukanya Samriddhi Yojana account for your girl child, the amount qualifies for Section 80C deduction. This account encourages savings for a girl child’s future and offers tax-free interest with a 21-year maturity period or until marriage after age 18.
Once you understand what is 80C in income tax, it becomes easier to align your investments with eligible instruments. The table below summarises the most commonly accepted investment avenues and expenses under Section 80C that help you reduce taxable income up to the prescribed limit.
Investment or Expense Type | Eligibility Under Section 80C |
Life Insurance Premiums | Premiums paid for self, spouse or children |
Public Provident Fund (PPF) | Deposits up to ₹1.5 lakh per annum |
National Savings Certificate (NSC) | Amount invested is deductible |
Tax-saving Fixed Deposits | Only with a 5-year lock-in period |
Equity-Linked Saving Scheme (ELSS) | Minimum lock-in of 3 years |
EPF Contributions | Employee share only |
Sukanya Samriddhi Yojana | For girl child under 10 years |
Principal on Home Loan | Repayment for residential property |
Tuition Fees | For up to 2 children in India |
Senior Citizens Savings Scheme | For individuals above 60 years |
NABARD Bonds, Infrastructure Bonds | Notified bonds only |
Stamp Duty and Registration | For new home purchase only |
You can use this list to check whether your existing commitments qualify for deduction under the current financial year.
When the new tax regime was introduced under Section 115BAC, it offered lower tax rates in exchange for giving up most deductions—including Section 80C. This created a choice for taxpayers like you to evaluate between simple taxation and benefit-linked savings.
If you opt for the old tax regime, you can continue to claim deductions under Section 80C and its related sub-sections. However, the new regime offers reduced slab rates with no requirement for investment declarations. Choosing the right regime depends on your income, family responsibilities, and investment style.
You should compare your total tax outgo under both systems before finalising your selection each year. If you already invest in EPF, PPF, or home loan EMIs, the old regime may suit you better. But if your income is simple with few deductions, the new regime might offer more convenience.
Timing plays a vital role in claiming Section 80C deductions effectively. Investing early in the financial year helps you avoid rushed decisions at the end of March. It also gives you ample time to review options and select suitable instruments aligned with your goals.
Mid-year investment reviews can help you track your remaining deduction capacity. This lets you adjust your contributions accordingly—whether through ELSS top-ups, recurring PPF deposits, or home loan repayments. Planning in quarterly intervals reduces the burden in March.
Avoid last-minute lump sum payments unless absolutely necessary. If you delay investments until the end of the year, you may miss out on options with lower risk or better lock-in benefits. You should spread your Section 80C investments across the year for ease and effectiveness.
Section 80C gives you a structured way to reduce your taxable income through planned investments and essential expenses. By understanding what is 80C in income tax and the instruments it covers, you gain control over your financial planning. Whether you are securing your family’s future through insurance, investing in long-term savings, or managing home loan repayments, Section 80C supports your financial discipline. However, it is equally important to respect the ₹1.5 lakh cap and ensure compliance with lock-in periods and investment conditions. When used wisely, this section becomes a valuable tool in your overall tax strategy.
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Yes, you can claim deductions under Section 80C while filing your Income Tax return, provided you have made eligible investments or payments during the financial year and opted for the old tax regime. Ensure all proof of investment is retained and submitted if requested by the income tax authorities.
No, the maximum deduction available under Section 80C is ₹1.5 lakh in total per financial year, not per instrument. You can spread this across multiple investments, such as PPF, ELSS, and insurance premiums, but the combined claim should not exceed the limit.
Yes, you can claim deductions under Section 80C (up to ₹1.5 lakh) and an additional ₹50,000 under Section 80CCD(1B) for NPS contributions. This means you can claim up to ₹2 lakh if you contribute to both categories, subject to compliance with all rules.
Section 80C covers various savings schemes and expenses like PPF, ELSS, and insurance. Section 80CCC is specifically for contributions to annuity plans. Section 80CCD relates to contributions to the National Pension System. All three have different scopes, but Sections 80C, 80CCC, and 80CCD(1) share a common ₹1.5 lakh limit.
No, donations are not eligible for deductions under Section 80C. They fall under a separate section—80G of the Income Tax Act. You can claim deductions on donations made to specified charitable institutions and relief funds, subject to prescribed limits and documentation.
Yes, you can claim a deduction for life insurance premiums paid through a private insurance aggregator, provided the insurance policy complies with Section 80C rules. The policy must be in the name of self, spouse, or children and satisfy the sum assured to premium ratio.
No, companies, partnership firms, and LLPs are not eligible to claim deductions under Section 80C. This section applies only to individual taxpayers and Hindu Undivided Families (HUFs). Corporate entities have different sections and provisions for tax deductions and business expenses.
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