Section 80C (section 123 of the new Income-tax Act, 2025) is the workhorse of tax saving in the old regime — it lets you cut up to ₹1.5 lakh from your taxable income each year. But the options inside it range from 3-year equity funds to 15-year government schemes, and picking the wrong one can lock your money away at a low return for years. Here's the full menu, ranked.
First: does 80C even apply to you?
Section 80C deductions exist only in the OLD tax regime. If you've chosen the new regime (the default), you can't claim 80C at all — so step one is to confirm the old regime is actually cheaper for you. It usually wins only if your total deductions cross roughly ₹4–4.5 lakh.
Compare both regimes — Salary CalculatorTry it on your numbersIn-Hand Salary CalculatorCTC to monthly take-home, with full breakupThe 80C options, ranked by bang-for-buck
- ELSS (tax-saving mutual fund) — the shortest lock-in (3 years) of any 80C option, with equity-level return potential (~10–14% historically). Best for growth if you can stomach market swings.
- PPF — government-backed, ~7.1%, completely tax-free (EEE), but a 15-year lock-in. The safe, tax-free core of an 80C portfolio.
- EPF — if you're salaried, your own provident-fund contribution already counts toward 80C. Many people fill a big chunk of the ₹1.5 lakh through EPF alone without realising it.
- Sukanya Samriddhi (SSY) — only for a girl child under 10, but one of the highest fixed rates (~8.2%) and fully tax-free. Excellent if you're eligible.
- NSC / tax-saver FD — 5-year lock-in, ~6.5–7.7%, but the interest is taxable. Reasonable for the risk-averse who've used up PPF.
- Life insurance premium & home-loan principal & kids' tuition fees — these also count, so check what you already pay before investing fresh money.
How to actually fill your ₹1.5 lakh
Don't blindly buy a new product every March. Work in this order: first count what's already happening automatically (EPF, any life-insurance premium, home-loan principal, tuition fees). Whatever gap is left to ₹1.5 lakh, fill with ELSS (if you want growth and a short lock-in) or PPF (if you want safety and tax-free certainty). Many people split the remainder between the two.
The ₹50,000 bonus most people miss
Beyond 80C, NPS gives an EXTRA ₹50,000 deduction under Section 80CCD(1B) (section 124 of the new Income-tax Act, 2025) — over and above the ₹1.5 lakh. It's the cheapest incremental deduction once you've maxed 80C, if you're comfortable locking money until 60.
Project what PPF or an ELSS SIP will actually grow to before you commit:
PPF CalculatorSIP Calculator (for an ELSS SIP)Frequently asked questions
- What is the maximum deduction under Section 80C?
- ₹1.5 lakh per financial year. Contributions across all 80C options combined — EPF, PPF, ELSS, life insurance, NSC, tax-saver FD, home-loan principal, tuition fees — count toward this single ₹1.5 lakh cap.
- Which 80C investment gives the highest return?
- ELSS (a tax-saving equity mutual fund) has the highest return potential — historically ~10–14% a year — and the shortest lock-in at 3 years, but returns are market-linked and not guaranteed. Among fixed options, Sukanya Samriddhi (~8.2%) leads, if you're eligible.
- Can I claim 80C in the new tax regime?
- No. Section 80C deductions are available only in the old regime. If you opt for the new regime, you cannot claim them — so check which regime is cheaper for you before investing for 80C.
- Is the ₹50,000 NPS deduction part of 80C?
- No — it's separate. NPS gives an additional ₹50,000 deduction under Section 80CCD(1B), over and above the ₹1.5 lakh 80C limit, making your effective deduction up to ₹2 lakh.