Section 80C Explained: What You Can Claim and How Much It Saves

Section 80C of the Income Tax Act is one of the most used tax-saving provisions for individuals. It lets you reduce your taxable income by up to Rs 1.5 lakh in a year, if you use the old tax regime and invest or spend in eligible options. This guide explains the common options in simple words.

Note: The deduction is generally available in the old tax regime, not in the new regime. Rules can change, so verify on the official income tax website or with a tax professional before filing.

Common 80C Options

Option	What it is	Think about
EPF / VPF	Provident fund deducted from salary	Often already counts towards the limit
PPF	Government-backed long-term savings account	Long lock-in period
ELSS mutual funds	Equity funds with a 3-year lock-in	Market-linked, returns not guaranteed
Life insurance premium	Premium on eligible life policies	Choose for protection first, not just tax
Home loan principal	Principal part of your home loan EMI	Counts within the same limit
Tuition fees	Fees paid for up to two children (rules apply)	Only tuition part
Tax saver fixed deposit	5-year bank FD	Interest is taxable

How Much Tax Can It Save?

The saving equals your tax rate multiplied by the amount you deduct. For example, if you are in the 20 percent slab and claim Rs 1,50,000, your tax falls by about Rs 30,000 before cess. In the 30 percent slab, the same claim saves about Rs 45,000 before cess.

How to Choose

Count what you already have: EPF and home loan principal often fill much of the limit.
Match the goal: choose long-term options for long-term goals, not only for the tax saving.
Check the lock-in: know when you can withdraw.
Do not buy a product at the last minute only to save tax.

Old Regime or New Regime?

Deductions like 80C matter only if you choose the old regime. The new regime has lower slab rates but fewer deductions. Compare both for your own income with the Income Tax Calculator, and read the old vs new regime guide.

Compare your tax in both regimes

Enter your income and 80C amount to see which regime gives the lower tax.

Open Income Tax Calculator

This article is general information, not tax advice.

Frequently Asked Questions

The maximum deduction under Section 80C is Rs 1.5 lakh per year, under the old tax regime.

Generally no. 80C is for the old regime. Compare both with a calculator.

Yes, employee contribution to EPF generally counts towards the limit.

It reduces taxable income by up to Rs 1.5 lakh. The tax saved depends on your slab rate.