Section 80C: Deduction for Investments & Payments (Up to ₹1.5 Lakh)

Applicable to: Individuals & HUFs

Section 80C is one of the most popular tax-saving sections, allowing deductions up to ₹1.5 lakh for specified investments, expenditures, and payments.

Eligible Investments/Payments Under Section 80C

1.   Life Insurance Premiums

• Premiums paid for self, spouse, or children.
• Policy must be in the name of taxpayer or family.
• Only premiums up to 10% of sum assuredare eligible (for policies issued after 1 April 2012).

2.  Employee Provident Fund (EPF) & Public Provident Fund (PPF)

• EPF(Employee’s contribution)
• PPF(Deposits in Public Provident Fund)
• VPF(Voluntary PF contribution beyond 12% of salary)

3.  Equity-Linked Savings Scheme (ELSS)

• Investments in ELSS mutual funds(3-year lock-in).

4.  Tax-Saving Fixed Deposits (FDs) & National Savings Certificate (NSC)

• 5-year tax-saving bank FDs(Post office or scheduled banks).
• NSC (National Savings Certificate)– 5-year tenure.

5.  Tuition Fees

• For 2 children(full-time education in India).
• Excludesdevelopment fees, donations, or transport charges.

6.  Principal Repayment of Home Loan

• Deduction available for principal repayment(under home loan EMI).
• Property must be self-occupied or let out(not for resale).

7.  Sukanya Samriddhi Yojana (SSY)

• Deposits in SSY account(for girl child, max 2 accounts per parent).

8.  Senior Citizens Savings Scheme (SCSS)

• Investments by senior citizens (60+ years).

9.  Unit-Linked Insurance Plans (ULIPs)

• ULIPs of LIC or other insurers(subject to premium limits).

10.  Others

• 5-year Post Office Time Deposit (POTD)
• Infrastructure Bonds (Tax-saving bonds)

Key Conditions & Limits

1. Maximum Deduction:₹1.5 lakh (combined for all 80C investments).
2. Lock-in Periods:
   • ELSS: 3 years
   • PPF: 15 years
   • NSC: 5 years
   • Tax-saving FD: 5 years
3. No Double Benefit:
   • If an investment is claimed under 80C, it cannot be claimed under any other section.
4. Proof Required:
   • Investment receipts, premium payment proofs, tuition fee receipts, etc.

Exclusions from Section 80C

• Life insurance maturity proceeds(tax-free under Section 10(10D) if premium ≤ 10% of sum assured).
• Interest earned on PPF/NSC/SCSS(tax-free).
• Withdrawals before lock-in period(may attract penalties/tax).

Tax-Saving Strategy Under 80C

• Mix of short & long-term investments(ELSS for liquidity, PPF for long-term).
• Use home loan principal repayment(if applicable).
• Plan before March 31to maximize deductions.

Comparison of Popular 80C Options

Section 80C helps taxpayers reduce taxable income by ₹1.5 lakh through a variety of investments and expenses. Choosing the right mix depends on financial goals, risk appetite, and liquidity needs.