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Tata Capital > Blog > Generic > Section 80C of the Income Tax Act: Deduction limits & eligibility

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Section 80C of the Income Tax Act: Deduction limits & eligibility

Section 80C of the Income Tax Act: Deduction limits & eligibility

Section 80C of the Income Tax Act lets individuals and Hindu Undivided Families (HUFs) lower their taxable income with a deduction of Rs. 1.5 lakh per financial year under the old tax regime. The 80C deduction list includes investments and expenses such as Equity-Linked Savings Schemes (ELSS), Unit Linked Insurance Plan (ULIP), Public Provident Fund (PPF), life insurance premiums, and home loan principal repayment.

Section 80C is a tax-saving provision under the Income Tax Act, 1961. It allows you to claim deductions of up to Rs. 1.5 lakh every financial year.

If your goal is to save taxes, you must understand the provisions of Section 80C. It lets you claim a deduction of up to Rs 1.5 lakh in a tax year under the old tax regime. This blog explains the limit, eligible investments, who can claim deductions, and whether you must choose it.

What is Section 80C?

Section 80C is a tax deduction under the old tax regime that allows individuals and Hindu Undivided Families (HUFs) to reduce their taxable income by up to Rs 1.5 lakh in a tax year through eligible investments and expenses. It reduces the gross total income. However, it is not a tax credit or a tax refund.

Also Read – Income tax slabs & rates in India for FY 2026-27

Section 80C deduction list: What qualifies?

The qualifying 80C deduction list is given in the table below:

Eligible investment/expenseTypeKey conditions/lock-in
Public Provident Fund (PPF)Investment15-year maturity (partial withdrawals allowed as per rules)
Employees’ Provident Fund (EPF)InvestmentEligible employee contribution; subject to EPF rules
Equity Linked Savings Scheme (ELSS)Investment3-year lock-in
Life insurance premiumInvestmentPremium must meet Income Tax Act conditions
National Savings Certificate (NSC)Investment5-year lock-in
Sukanya Samriddhi Yojana (SSY)InvestmentAccount must meet scheme rules; long-term lock-in until maturity/eligible withdrawal
Senior Citizens’ Savings Scheme (SCSS)Investment5-year maturity (extendable as per scheme rules)
5-year tax-saving fixed depositInvestment5-year lock-in
Unit Linked Insurance Plan (ULIP)InvestmentSubject to prescribed tax conditions and policy rules
National Pension System (NPS) – Section 80CCD(1)InvestmentCounts within the combined Rs 1.5 lakh limit
Children’s tuition feesExpenseTuition fees for up to two children, subject to prescribed conditions
Home loan principal repaymentExpenseEligible for a self-occupied or let-out residential house, subject to conditions
Stamp duty and registration chargesExpenseAllowed in the year paid, within the overall deduction limit and subject to conditions

Is Section 80C still available in 2026?

Section 80C is still available in 2026 under the old tax regime. However, since the new tax regime is the default, many taxpayers cannot claim this deduction. Under the Income Tax Act 2025, effective 1 April 2026, Section 80C is now Section 123 read with Schedule XV. The Rs. 1.5 lakh limit and eligible investments remain the same.

Also Read – FD vs. mutual funds

Old regime vs New regime: Is Section 80C still worth it?

The following table compares the tax treatment under the old and new regimes for FY 2025-26 (AY 2026-27).

Gross annual incomeNew tax regime (with standard deduction)Old tax regime (with full Rs. 1.5 lakh Section 80C deduction and standard deduction)Which is lower?
Rs. 10 lakhNil (after standard deduction and rebate, if eligible)NilBoth are the same
Rs. 15 lakh~Rs. 97,500~Rs. 2,10,600New regime
Rs. 20 lakh~Rs. 1,92,400~Rs. 3,66,600New regime

The new tax regime now gives a lower tax bill for many taxpayers even if they fully use the Rs 1.5 lakh Section 80C deduction under the old regime. Thus, before investing in a 5-year tax-saving FD or an insurance policy only to save tax, compare your tax under both regimes. You must calculate your own numbers or consult a Chartered Accountant.

Also Read – Difference between tax deduction and tax exemption

What is Section 80C under the new Income Tax Act 2025 (Now Section 123)?

From 1 April 2026, several tax deduction sections have been renumbered under the Income Tax Act 2025. However, this is only a structural change. The deduction limits, eligibility rules, and old-regime-only condition remain the same. Tax forms, notices, and calculation tools will now use the new section numbers given below.

Old SectionNew Section (Income Tax Act 2025)
Section 80CSection 123
Section 80CCDSection 124
Section 80DSection 126
Section 80ESection 129
Section 80GSection 133
Section 87ASection 156

How to claim deduction under Section 80C?

The step-by-step process to claim income tax Section 80C deductions is as follows:

  1. Confirm that you have chosen the old tax regime.
  2. Gather proofs such as your PPF passbook, LIC premium receipts, ELSS statements, and home loan principal certificate from your lender.
  3. Declare eligible investments to your employer for TDS or claim them while filing your ITR.
  4. Keep all documents safely for future verification, if required.

Also Read – How to save tax for a salary above 50 lakhs

What are the common mistakes when claiming 80C deductions?

  • Assuming Rs. 1.5 lakh is a separate limit for Sections 80C, 80CCC and 80CCD(1).
  • Confusing home loan principal (Section 80C) with home loan interest (Section 24(b)).
  • Claiming Section 80C deductions under the new tax regime.
  • Buying insurance only to save tax.
  • Ignoring the five-year property-sale reversal rule.
  • Forgetting that EPF contributions already use part of the Rs. 1.5 lakh limit.

Conclusion

Section 80C can help you save tax, but only if you choose the old tax regime. Before investing, compare your tax under both regimes, understand the eligible deductions, and invest based on your financial goals and not just to save tax.

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FAQs

What is Section 80C of the Income Tax Act?

Section 80C is a tax deduction that lets eligible individuals and HUFs reduce their taxable income by up to Rs 1.5 lakh under the old tax regime.

What is the maximum deduction under Section 80C?

The maximum deduction under 80C is Rs 1.5 lakh in a tax year.

What is included in the 80C deduction list?

The list of eligible deductions under 80C includes PPF, EPF, ELSS, life insurance premiums, NSC, SSY, SCSS, 5-year tax-saving FDs, ULIPs, NPS under Section 80CCD(1), children’s tuition fees, home loan principal repayment, and stamp duty and registration charges.

Can I claim 80C under the new tax regime?

No. Section 80C is available only under the old tax regime.

Is Section 80C still valid after the Income Tax Act 2025?

Yes. The Income Tax Act 2025, effective 1 April 2026, has renumbered Section 80C as Section 123. However, the deduction limit and eligible investments remain the same.

Does home loan principal repayment qualify under 80C?

Yes. Home loan principal repayment qualifies if you fulfill the conditions of the Income Tax Act.

Who is eligible to claim a deduction under Section 80C?

Individuals and Hindu Undivided Families (HUFs) who opt for the old tax regime can claim the deduction for eligible investments.

Is the Rs 1.5 lakh limit separate for 80C, 80CCC and 80CCD?

No. Rs 1.5 lakh is the combined limit for Sections 80C, 80CCC and 80CCD(1). It is not a separate limit for each section.
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