Section 80C
Section 80C lets you deduct up to ₹1.5 lakh per year from taxable income for specified investments and expenses. It works only under the old tax regime. PF, PPF, ELSS, LIC premiums, tuition fees, and home loan principal all qualify.
What is Section 80C?
Section 80C of the Income Tax Act is the most-used tax-saving section in India. The combined cap is ₹1,50,000 per financial year across all eligible items. Eligible investments include EPF (employee share), PPF, ELSS mutual funds, NSC, 5-year tax-saver FDs, ULIPs, life insurance premiums up to 10% of sum assured, and Sukanya Samriddhi for daughters under 10. Eligible expenses include tuition fees for up to two children (school or college, India only), principal repayment on a home loan, and stamp duty paid on a new house. Only the principal portion of EMI counts here. Interest on home loan goes under Section 24(b). The deduction is available only if you opt out of the new tax regime and stick with the old one.
Example
Ravi has a basic salary of ₹50,000/month. His EPF contribution (12% of basic) is ₹6,000/month or ₹72,000/year. He pays LIC premium of ₹30,000 and ELSS SIP of ₹4,000/month (₹48,000/year). Total: ₹72,000 + ₹30,000 + ₹48,000 = ₹1,50,000. He uses the full 80C cap.
How Section 80C is used
Employees declare 80C investments on Form 12BB in April and submit proofs in January. Payroll software reduces TDS month by month based on the declaration so take-home salary improves from April itself.
Section 80C FAQs
Can I claim 80C under the new tax regime?
No. 80C is available only under the old regime. The new regime gives lower slab rates but removes most deductions including 80C.
Does my EPF contribution count under 80C?
Yes. The employee share of EPF (12% of basic + DA) counts toward the ₹1.5 lakh cap. The employer share does not.
Are home loan EMIs fully deductible under 80C?
Only the principal part of the EMI qualifies under 80C. Interest is claimed separately under Section 24(b), with a cap of ₹2 lakh for self-occupied property.