What is Section 80C?

Section 80C of the Income Tax Act allows you to claim deductions of up to Rs 1,50,000 from your gross total income. This can save you up to Rs 46,800 in taxes (at 30% + cess) annually.

Note: This deduction is only available in the Old Tax Regime.

Eligible Investments Under Section 80C

1. Public Provident Fund (PPF)

Maximum Investment: Rs 1.5 lakh per year
Lock-in Period: 15 years
Interest Rate: 7.1% p.a. (Q4 FY 2024-25)
Tax Treatment: EEE (Exempt-Exempt-Exempt)
Best For: Risk-averse long-term investors

2. Equity Linked Savings Scheme (ELSS)

Maximum Deduction: Rs 1.5 lakh
Lock-in Period: 3 years (shortest among 80C options)
Returns: Market-linked (historically 12-15% CAGR)
Tax Treatment: LTCG above Rs 1.25 lakh taxed at 12.5%
Best For: Investors with moderate risk appetite

3. National Pension System (NPS)

Section 80C: Up to Rs 1.5 lakh
Section 80CCD(1B): Additional Rs 50,000
Lock-in Period: Until retirement (60 years)
Returns: 8-10% historical returns
Best For: Retirement planning with tax benefits

4. Life Insurance Premium

Premium paid for self, spouse, and children
Maximum deduction: Rs 1.5 lakh
Policy should have minimum 10-year term
Maturity proceeds tax-free under Section 10(10D)

5. Employee Provident Fund (EPF)

Mandatory for salaried employees
Employee contribution qualifies under 80C
Interest rate: 8.15% (FY 2023-24)
Tax-free if service is 5+ years

6. Sukanya Samriddhi Yojana (SSY)

For girl child (up to 10 years age)
Interest rate: 8.2% p.a.
Lock-in until girl reaches 21 years
Completely tax-free (EEE status)

7. 5-Year Tax Saver Fixed Deposit

Lock-in period: 5 years
Interest rate: 6.5-7.5% (varies by bank)
Interest is taxable
Good for conservative investors

8. National Savings Certificate (NSC)

Lock-in period: 5 years
Interest rate: 7.7% p.a.
Interest is taxable but can be reinvested
Available at post offices

9. Home Loan Principal Repayment

Principal component of EMI qualifies
Combined limit of Rs 1.5 lakh with other 80C investments
Stamp duty and registration charges also qualify

10. Tuition Fees

Fees paid for children's education (max 2 children)
Only tuition fees, not development fees or donations
School, college, or university in India

Investment Strategy by Age

Age 25-35 (Wealth Building Phase)

ELSS: 40% - High growth potential with short lock-in
PPF: 30% - Safe, tax-free returns
NPS: 30% - Additional Rs 50,000 under 80CCD(1B)

Age 35-45 (Peak Earning Phase)

EPF/PPF: 40% - Building retirement corpus
ELSS: 30% - Continued equity exposure
Insurance: 20% - Term insurance for family protection
SSY (if applicable): 10% - Daughter's future

Age 45-55 (Pre-Retirement Phase)

PPF: 40% - Safe returns
NPS: 30% - Retirement focus
5-Year FD: 20% - Lower risk
ELSS: 10% - Moderate equity exposure

Comparison Table

Investment	Lock-in	Returns	Risk	Liquidity
ELSS	3 years	12-15%*	High	Low
PPF	15 years	7.1%	Low	Very Low
NPS	Till 60	8-10%*	Medium	Very Low
Tax Saver FD	5 years	6.5-7.5%	Low	Low
NSC	5 years	7.7%	Low	Low
SSY	21 years	8.2%	Low	Very Low

*Market-linked, past performance

Common Mistakes to Avoid

Last-minute investments: Don't wait until March to make 80C investments

Ignoring employer EPF: Your EPF contribution already counts towards 80C

Over-investing in insurance: Buy term insurance, not investment-cum-insurance

Not considering liquidity: Match lock-in period with your goals

Forgetting NPS additional benefit: Use Section 80CCD(1B) for extra Rs 50,000

Conclusion

Section 80C offers multiple investment options to suit different risk profiles and financial goals. The key is to start early, diversify across different instruments, and align investments with your long-term objectives.

Use our PPF Calculator and NPS Calculator to plan your tax-saving investments.

Section 80C Deductions: Complete Guide to Save Rs 1.5 Lakh Tax