Section 80C Deductions: What Actually Qualifies

Section 80C of India’s Income Tax Act, 1961 lets old-regime filers deduct up to ₹1,50,000 per financial year from taxable income — but only for a specific, closed list of investments and payments. It’s a common point of confusion: 80C isn’t “save money, pay less tax” in general — it’s a cap that applies only to qualifying instruments, and anything beyond ₹1.5 lakh in that list gets no further deduction under 80C itself.

Naming note (FY 2026-27): Secondary tax media have reported that the Income Tax Act, 2025 (said to apply from 1 April 2026) renumbers this deduction as Section 123, with the qualifying list described as Schedule XV. Treat that as a reported structural rename — not verified here against the official Gazette or Income Tax portal. Confirm the current section number, cap, and list on incometax.gov.in / incometaxindia.gov.in before filing. This page keeps the familiar “80C” label because that is still what most people search; where both names appear in secondary sources, they are described as pointing at the same ₹1.5 lakh-style category.

Last reviewed 2026-07-27. Deduction rules change with each Finance Act — always confirm the current year’s figures against the Income Tax Department before filing. Not tax advice.

What typically qualifies (illustrative, not exhaustive)

Instrument	Notes
PPF (Public Provident Fund)	Deposits count; see the PPF calculator for maturity math
EPF (Employee Provident Fund)	Your own contribution, deducted automatically for most salaried employees
ELSS mutual funds	Equity-linked, shortest lock-in (3 years) among 80C options
Life insurance premiums	For policies on self, spouse, or children
5-year tax-saving FDs	A specific FD variant with a mandatory 5-year lock-in
Sukanya Samriddhi Yojana	For a girl child, if applicable
Principal repayment on a home loan	The principal portion only — interest is a separate deduction (Section 24)
Children’s tuition fees	Up to two children, tuition only (not donations, transport, etc.)

The part people miss: it’s a cap, not a stack

If you put ₹80,000 in PPF and pay ₹90,000 in life insurance premiums, that’s ₹1,70,000 in qualifying payments — but the deduction still caps at ₹1,50,000. Beyond the cap, 80C gives nothing further, though a separate ₹50,000 under Section 80CCD(1B) is available specifically for additional NPS contributions, on top of the 80C cap.

Old regime vs new regime

This entire deduction category applies to the old regime only. The new regime (the default since FY 2023-24) uses lower slab rates but drops most deductions, 80C included. Whether the old regime’s lower taxable income (after 80C and other deductions) beats the new regime’s lower rates depends entirely on how much you can actually claim — see the old vs new regime basics for how that comparison works, and the income tax calculator to run your own numbers under both.

FAQ

Does EPF count toward the same ₹1.5 lakh cap as PPF?

Yes — EPF, PPF, ELSS, life insurance, and the rest of the 80C list all draw from the same single ₹1,50,000 cap, not separate caps per instrument.

Is home loan interest part of 80C?

No. Home loan principal repayment is under 80C; home loan interest is a separate deduction under Section 24(b), with its own limit.

Is “Section 80C” still the correct name?

Secondary sources report a rename to Section 123 under the Income Tax Act, 2025 from FY 2026-27.¹ Confirm the live label and schedule on the official Income Tax portal or Gazette before you rely on either name. This page uses “80C” because that is still the common search term.

Is this financial advice?

No — this is a general explanation of how the deduction category works, not a recommendation for your specific situation. Confirm current limits and eligibility with the official Income Tax Department resources or a qualified professional before filing.

Footnotes

1. Secondary reporting only — e.g. ClearTax — Section 123 of Income Tax Act 2025; Business Today — Section 80C / Section 123 coverage. Prefer the official portal or Gazette over media summaries. ↩