80C Deduction

Table of Content

1. What is section 80C?

2. How to avail of tax deductions under section 80C?

3. Eligibility Criteria of Section 80C of the Income Tax Act

4. Section 80C of Income Tax Act, 1961 - Deductions list

5. How to increase tax savings under section 80C?

6. How much can be claimed under section 80C?

7. How does HDFC Life help you save tax?

8. Choose the right instruments under section 80C

9. How long should you stay invested?

10. Other 80C deduction options

11. Conclusion

12. FAQs on Section 80C Deduction

What is section 80C?

Section 80C of the Income Tax Act is a clause under which deductions are available for investments and expenditures made in the year towards specified financial instruments and causes. The upper limit for deductions under 80C is Rs 1.5 lakh every financial year from the total taxable income of the investor.

How to avail of tax deductions under section 80C?

Any individual or HUF can avail of tax deductions under section 80C by carrying out investment and spending activities throughout the year. The following table illustrates the avenues through which claiming deductions is possible.  

Eligibility Criteria of Section 80C of the Income Tax Act

A crucial point that needs to be noted is that deductions under section 80C have a set of specified eligibility criteria. They are as follows:

• 80C deductions and exemptions are available only to Individual taxpayers and HUFs. 

• Both Indian residents and non-resident Indians are entitled to the provisions of this section.  

• Partnership firms, corporate bodies and other businesses are not eligible for 80C deductions and exemptions. 

Section 80C of Income Tax Act, 1961 - Deductions list

Section 80C provisions can be applied to a specified set of investments and expenditures. These investments not only act as tax-saving instruments but also fetch returns across the policy period. However, deductions can be claimed up to a maximum limit of Rs 1.5 lakh for investments made in the financial year. Following is the list of investments, for which deductions and exemptions are available under section 80C of the Income Tax Act, 1961 subject to specific conditions as may be prescribed

• Life Insurance premium

• Unit Linked Insurance Plan (ULIP) premium

• Employee Provident Fund (EPF)

• Public Provident Fund (PPF)

• Equity linked Savings Scheme (ELSS)

• Tax Saving Fixed Deposits

• National Pension Scheme (NPS)

• Senior Citizen Savings Scheme

• Sukanya Samriddhi Yojana

• National Savings Certificate (NSC)

• Home Loan principal payment

How to increase tax savings under section 80C?

Section 80C of the Income Tax Act, 1961 offers you tax savings and exemptions with an upper limit of Rs 1.5 lakh a year for investments in different financial plans. This amount can be claimed for a single investment or a cumulative investment in various eligible instruments. There is no one-size-fits-all-all formula to claim 80C deductions and increase tax savings under it. It is better to pick tax-saving investments that match your needs, financial goals and affordability. However, if you exhaust the total limit of Rs 1.5 lakh, an additional deduction of Rs 50,000 can be claimed for investment in a Government-backed pension plan. Pension plans like NPS therefore provide a way to increase your tax savings. 

How much can be claimed under section 80C?

Under the provisions of section 80C, one can claim deductions for tax-saving investments made throughout the year. Section 80C along with its subsections 80CCC and 80CCD (1) allow for a total claim of Rs 1.5 lakh per annum. Alongside, one can get an additional deduction of Rs 50,000 under section 80CCD (1B). This applies to investments in Government-backed pension plans like the National Pension Scheme only. 

How does HDFC Life help you save tax?

In its kitty, HDFC Life has different insurance plans that cater to the provisions of section 80C of the Income Tax Act, 1961. Payment of premiums for these plans can thus help you reduce your taxable income through deductions up to Rs 1.5 lakh a year. Subsequently, the maturity benefit can also be tax-free subject to the conditions specified under section 10(10D). 

Choose the right instruments under section 80C

Investment is always a critical decision as it is needed to match your needs and affordability and provide you with the best possible gain. Here, the gain comprises of not only the fulfilment of your goals and financial security, but also the tax benefits the investment offers. Under section 80C of the Income Tax Act, 1961, a total of Rs 1.5 lakh a year can be claimed as a deduction from your taxable income. Hence, it’s extremely crucial to choose the right instruments to avail of 80C tax benefits, that will also best fit your investment needs. For instance, with growing uncertainties in life, it is always a wise pick to include life insurance in your investment portfolio that reduces your tax liability subject to section 80C. 

How long should you stay invested?

While you choose to invest in a tax-saving instrument under the provisions of section 80C, there’s another important point that needs to be kept in mind. Different investments have different time limits, which need to be followed to avail of the tax benefits. The following table illustrates how long you should stay invested in different financial instruments to enjoy the 80C deductions. Here’s a gist:

Other 80C deduction options

While most taxpayers choose common tax-saving instruments to reap the benefits of section 80C, a few other investment options can get you deductions under the same section. Here’s a list:

• Subscription to National Housing Bank pension fund/deposit scheme

• Contribution by Employee to Approved Superannuation Fund

• Contribution to annuity plans by LIC or other Govt. approved insurers

• Subscription to National Bank for Agriculture and Rural Development (NABARD) bonds

• Subscription to notified deposit scheme of Public Sector Housing Finance 

• Subscription to equity shares or debentures of a public company or public financial institution that constitutes any eligible issue of capital approved by the board where proceeds are used for an infrastructure company

Conclusion

Understanding Section 80C investments can help you save money on taxes while still achieving your financial goals. An income tax calculator can help you understand how different investments affect your tax burden. By carefully selecting tax-saving options that align with your needs, you can maximize your benefits under Section 80C and make smarter financial decisions.

FAQs on Section 80C Deduction

Q. What is Section 80C of the Income Tax Act, 1961?

Section 80C provides taxpayers with the opportunity to reduce their taxable income by up to ₹1.5 lakh through eligible investments and expenses. These include contributions to Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC), and premiums paid for life insurance policies or other investments and expenses.

Q. What deductions are allowed in 80C?

Under section 80C, eligible investments can fetch you a total deduction of Rs 1.5 lakh per year. The list of popular investments with 80C benefits includes life insurance, ULIP plans, EPF, PPF, NSC, Senior Citizen Savings Scheme, Sukanya Samriddhi Yojana, Tax saving FDs, Home loan repayment, stamp duty, registration costs towards purchase of a house etc.

Q. Can I claim 1.5 lakh in 80C?

Yes, you can claim a total deduction of Rs 1.5 lakh under section 80C of the Income-tax Act, 1961. 

Q. Are 80C and 80CCC the same?

No. Section 80C offers you a total deduction of Rs 1.5 lakh per year on different kinds of investments. Whereas, Section 80CCC entitles you with a deduction of Rs 1.5 lakh a year against investment towards specific pension plans only. 

Q. What is the maximum tax exemption under Section 80C?

The maximum tax exemption under Section 80C is Rs 1.5 lakh against one or more eligible investments every year. This amount gets deducted from the taxable income for the year.

Q. Are donations eligible for tax exemptions under Section 80C?

No, donations are not eligible for tax exemptions under 80C. Instead, you can claim a deduction for donations made under section 80G of the Income Tax Act, 1961. 

Q. Who can claim deductions under Section 80C of the Income Tax Act, 1961?

Individuals and Hindu Undivided Families can claim deductions under section 80C of the Income Tax Act, 1961. Both resident and non-resident Indians fall into this category. 

Q. Is term insurance premium included under the 80C deduction?

Yes, term insurance premium is included under 80C deduction up to Rs 1.5 lakh a year. 

Q. Can deduction under sec 80C be claimed under New Tax Regime?

No, deduction under Sec 80C is not available under New Tax Regime.

Q. How has Section 80C changed under the Income Tax Bill 2025?

The Income Tax Bill 2025 introduces a restructuring of Section 80C by merging various deductions under Schedule XV within Section 123. This revision aims to simplify tax-saving provisions and enhance transparency for taxpayers.

Q. When will the revised provisions of the Income Tax Bill 2025 come into effect?

The modifications are scheduled to be implemented from April 1, 2026. 

RELATED ARTICLE

• Difference between Section 80C and 80CCC
• Old Tax Regime vs New Tax Regime: Who should opt? How is it Beneficial?
• Tax benefits through Sukanya Samriddhi Yojana
• Section 80D - Income Tax Deduction
• Income Tax Benefit on Life Insurance - Section 80C and 10D
• Best Tax-Saving Investments under Section 80C