Section 80C

Section 80C lets you reduce your taxable income by up to ₹1.5 lakh a year, if you put that money into approved options. It applies under the old tax system, so it only helps if you choose the old regime.

How the deduction works

Under the old regime you subtract qualifying 80C amounts from your income before tax is worked out, so you are taxed on a smaller figure. If you are in, say, the 20% band, a full ₹1.5 lakh of 80C cuts your tax by about ₹30,000. The ₹1.5 lakh is a single combined cap across every 80C option, not a separate limit for each.

What counts

Common qualifying options include your EPF contribution, PPF, ELSS mutual funds, life insurance premiums, the principal part of a home loan EMI, five-year tax-saving fixed deposits, and Sukanya Samriddhi for a daughter. Some of these are investments you get back later; some, like insurance premiums, are costs. The right mix depends on your goals, not just the tax saving. See them compared in ELSS vs PPF vs FD.

Only under the old regime

This is the catch that trips people up. Section 80C does nothing in the new regime, which instead offers lower slab rates and a large rebate but almost no deductions. So before chasing 80C, check which tax regime leaves you paying less overall, using your real numbers. The income tax calculator and old vs new tax regime help you compare. The exact 80C list can change, so confirm it on incometax.gov.in.