What is the maximum deduction under section 80C?

₹1,50,000 in a tax year. The limit is shared with your own NPS contribution under 80CCD(1) and pension plans. The extra ₹50,000 under 80CCD(1B) for NPS is outside this cap.

Can I claim 80C in the new tax regime?

No. Section 80C (section 123 of the 2025 Act) is available only under the old regime. In the new regime the main deductions for salaried people are the ₹75,000 standard deduction and the employer's NPS contribution.

Is the employer's PF contribution covered by 80C?

No. Only the employee's own EPF or VPF contribution counts. The employer's share is not taxed up to the limits in the law, but it is not an 80C deduction.

Does 80C still matter after the Income-tax Act, 2025?

Yes, for old-regime taxpayers. The deduction moved to section 123 with the list of eligible items in Schedule XV, and the ₹1,50,000 limit stayed the same.

Home › Learn › Income tax › Section 80C: the ₹1.5 lakh deduction explained

Section 80C: the ₹1.5 lakh deduction explained

Updated 11 October 2026

Section 80C lets you reduce your taxable income by up to ₹1,50,000 a year for money you put into specified savings, insurance and expenses, such as EPF, PPF, ELSS mutual funds, life insurance premium, children's tuition fees and home loan principal. It is available only if you choose the old tax regime. Under the Income-tax Act, 2025, which applies from tax year 2026-27, the same deduction now sits in section 123 read with Schedule XV, but almost everyone still calls it 80C.

How the deduction works

A deduction is subtracted from your gross total income before tax is worked out. It is not a cash refund of what you invest. If you are in the 30% slab, every ₹1 you claim under 80C saves you 30 paise plus 4% cess on that, so about 31 paise. In the 20% slab it saves about 21 paise, and in the 5% slab about 5 paise.

The ₹1,50,000 is a single combined limit. It does not matter whether you reach it with one investment or ten. Anything above ₹1,50,000 gives no extra tax benefit, though the investment itself may still be worth making.

What counts under 80C

Item	Key condition
Employee Provident Fund (EPF) and VPF	Your own contribution only, not the employer's share
General Provident Fund (GPF) for government staff	Your monthly subscription
Public Provident Fund (PPF)	Deposits up to ₹1,50,000 a year; 15-year account
ELSS (tax-saving mutual funds)	3-year lock-in, the shortest among 80C options
Life insurance premium	For self, spouse or children; premium within the prescribed share of the sum assured
National Savings Certificate (NSC)	5-year post office certificate
5-year tax-saver bank FD	Cannot be broken early; interest is taxable
Senior Citizens' Savings Scheme (SCSS)	For people aged 60 and above
Sukanya Samriddhi Yojana	Account for a girl child
Children's tuition fees	Full-time education in India, up to 2 children; not donations or transport
Home loan principal, stamp duty and registration	Residential house; reversed if sold within 5 years of possession
Your own NPS contribution (80CCD(1)) and pension plans	Share the same ₹1,50,000 overall cap

For central government employees, GPF and the CGEGIS insurance deduction usually appear under 80C in Form 16. NPS has an extra deduction outside this limit, covered in our guide on NPS tax benefits.

How much tax 80C saves

Worked example. Priya earns enough to be in the 30% slab under the old regime. In the year she has: EPF from salary ₹72,000 (12% of ₹50,000 basic × 12 months), PPF ₹50,000, life insurance premium ₹18,000 and her son's tuition fees ₹30,000. Total = ₹72,000 + ₹50,000 + ₹18,000 + ₹30,000 = ₹1,70,000. She can claim only ₹1,50,000. Tax saved = 30% of ₹1,50,000 = ₹45,000, plus 4% cess of ₹1,800, so ₹46,800. If she were in the 20% slab, the saving would be ₹30,000 + ₹1,200 = ₹31,200.

Notice that EPF alone used almost half her limit. Before buying an insurance policy or ELSS in March, check how much of the ₹1,50,000 your payslip already covers through EPF or GPF.

80C and the new tax regime

The new regime, which is the default, does not allow 80C at all. Its lower slabs are meant to replace these deductions. From tax year 2026-27 the new regime gives a rebate that wipes out tax on taxable income up to ₹12 lakh, and with the ₹75,000 standard deduction a salaried person pays no tax up to a salary of ₹12,75,000. If your salary is in that range, 80C investments will not reduce your tax because there is nothing to reduce.

Above that, compare both regimes with your actual numbers. As a rough rule, the old regime starts to win only when your total deductions (80C, 80D, home loan interest, HRA and so on) are large. Use the income tax calculator to compare them side by side, or see the 2026-27 slabs.

How to claim it

Declare to your employer at the start of the year and submit proofs (premium receipts, PPF passbook, fee receipts) by the deadline your payroll team sets, usually January or February. The employer then deducts less TDS.
If you missed the deadline, you can still claim the deduction when you file your return and get the extra TDS back as a refund. Keep the proofs in case of a notice.
Pay within the year. The deduction is for amounts paid between 1 April and 31 March of the tax year, so a premium paid on 2 April counts in the next year.

Common mistakes

Counting the employer's EPF share. Only your own contribution qualifies.
Claiming tuition fees for coaching classes or school bus charges. Only the tuition fee part counts.
Buying an insurance policy only for 80C. A long-term endowment plan with low returns can cost more than the tax it saves.
Forgetting that the deduction is lost if you switch to the new regime in a year. You can switch each year if you have only salary income, so decide before you invest.