Section 80C is probably the most popular tax-saving section in the Income Tax Act. It allows you to save tax on investments and expenses up to ₹1.5 lakh per year. The beauty is you can combine multiple options - EPF, PPF, ELSS mutual funds, life insurance, home loan principal repayment, NSC, tax-saving FDs, and many more. The trick is to choose the right combination that gives you both tax benefit and good returns.
For FY 2025-26, popular 80C options include EPF (12% of basic salary, doubles with employer contribution), PPF (up to ₹1.5 lakh, 7-8% tax-free returns), ELSS mutual funds (equity exposure with tax benefit, 10-12% potential returns), life insurance (guaranteed plans or term insurance), home loan principal (when you pay EMI), NSC, tax-saving FDs, and Sukanya Samriddhi Yojana. Each has different features - some are locked for long periods, some give equity exposure, some are tax-free at maturity.
Our Section 80C optimizer helps you find the best combination based on your goals, risk tolerance, and liquidity needs. If you want long-term wealth creation, allocate more to SIPs in ELSS funds. If you prefer safety and guaranteed returns, choose more PPF and NSC. If you want tax-free maturity for specific goals, consider Sukanya Samriddhi for daughters. The key is not to exceed ₹1.5 lakh total across all options.
Remember, Section 80C is available only in the old tax regime. Under the new regime, you get no 80C benefits but pay lower tax rates. Use our income tax calculator to see which regime is better for you based on your investments. Many people discover they're better off in old regime if they're already investing ₹1.5 lakh or more in 80C eligible products.
For complete list of Section 80C eligible investments and their features, check the Income Tax Department's website at Income Tax deduction chart which explains all eligible deductions including Section 80C limits and conditions.
| Investment | Max Amount | Lock-in Period | Expected Returns |
|---|---|---|---|
| ELSS Mutual Funds | ₹1,50,000 | 3 years | 10-15% |
| PPF | ₹1,50,000 | 15 years | 7.1% |
| NPS (Tier I) | ₹50,000 | Till 60 years | 8-12% |
| Sukanya Samriddhi | ₹1,50,000 | 21 years | 7.6% |
| NSC | ₹1,50,000 | 5 years | 6.8% |
| Tax Saving FD | ₹1,50,000 | 5 years | 6.5% |
The maximum deduction under Section 80C is ₹1.5 lakh per financial year. This includes all eligible investments and expenses.
ELSS mutual funds typically offer the highest returns (10-15% annually) but come with higher risk and a 3-year lock-in period.
Yes, you can change your Section 80C investments every year. However, consider lock-in periods and your long-term financial goals.
Diversification is recommended to balance risk and returns. Spread your investments across different instruments based on your risk profile.
Invest as much as you can afford. Even partial utilization of Section 80C provides tax benefits. Start with smaller amounts and increase gradually.