Section 80CDeduction for Specified Investments and Payments
Section 80C is the best-known deduction in Indian tax law, allowing a capped amount of specified investments and payments to be subtracted from taxable income under the old regime.
In short
- The ceiling is ₹1,50,000 for the year, and it is a combined ceiling across every eligible item, not a limit per instrument.
- It is not available under the new tax regime. This is the single largest reason the old regime still makes sense for some taxpayers.
- The deduction follows the payment, not the contract. What matters is the amount actually paid or deposited during the financial year.
- Sections 80CCC and 80CCD(1) share the same ₹1,50,000 ceiling through Section 80CCE. The additional NPS deduction under 80CCD(1B) sits outside it.
- Under the Income-tax Act, 2025 this is not a straight renumbering. The relief becomes Section 123 read with Schedule XV: the ₹1,50,000 ceiling and the eligible items are unchanged, but the qualifying list now sits in the Schedule and the aggregation the old Section 80CCE performed is built into the cap. The standalone NPS deduction and the employer's NPS contribution sit separately in Section 124.
Who it applies to
- Individuals and Hindu Undivided Families
- Assessees who have chosen the old tax regime, since the deduction is not available under the new regime
- Anyone making the specified investments or payments during the financial year, from their own income
How it works
Section 80C is the provision most Indian taxpayers can name, and the one most often misunderstood as a single investment rather than a basket. It covers a long and deliberately varied list: employee provident fund contributions, public provident fund deposits, life insurance premiums, equity-linked savings schemes, five-year tax-saving fixed deposits, National Savings Certificates, Sukanya Samriddhi deposits, principal repayment on a housing loan, and tuition fees for up to two children, among others. The policy intent behind that spread is to push household savings towards long-term instruments, which is why almost everything on the list carries a lock-in.
The ceiling is the part that trips people. ₹1,50,000 is the total across the entire basket. Someone whose EPF contribution alone is substantial and who is also repaying a home loan may find the limit exhausted before they invest a rupee voluntarily, which makes further tax-saving investment pointless from a purely tax perspective. Working out how much headroom actually remains, rather than assuming the whole limit is available, is the practical first step.
The regime question now dominates everything else. Section 80C is an old-regime deduction. Under the new regime it simply does not apply, and since the new regime is the default, a taxpayer who does nothing gets no 80C benefit regardless of what they invested. The arithmetic of whether the old regime plus deductions beats the new regime's lower rates is genuinely taxpayer-specific and turns on how much of the limit you can actually fill.
Two mechanical points worth knowing. First, the deduction is available on a payment basis: a premium due in March but paid in April falls into the next financial year. Second, several items claw back. Surrendering a life insurance policy early, selling a house within five years of possession, or breaking a tax-saving deposit can cause deductions already claimed to be added back to income in the year of the breach.
The Income-tax Act, 2025 carries this relief forward from 1 April 2026 as Section 123 read with Schedule XV, with the amount and the eligible items unchanged. The restructuring is worth knowing about even so. The section body states little more than the ₹1,50,000 ceiling, the list of qualifying investments and payments lives in Schedule XV, and the aggregation that Sections 80CCC and 80CCE handled under the old Act is folded into the same cap, so citing Section 123 on its own will not tell you whether a particular instrument qualifies. Nearly all search traffic, software, and professional conversation still says 80C, which is why this page is keyed to the old number.
Also searched as: 80C deduction, section 80 c, 80C limit, 1.5 lakh deduction, Section 80C, Section 123, Section 123 read with Schedule XV.
Frequently asked questions
Is Section 80C available under the new tax regime?
No. Section 80C is an old-regime deduction and does not apply under the new regime, which offers lower slab rates in exchange for giving up most deductions. Since the new regime is the default, claiming 80C requires actively opting for the old regime.
What is the maximum deduction under Section 80C?
₹1,50,000 for the financial year. This is a combined ceiling shared with Sections 80CCC and 80CCD(1) by virtue of Section 80CCE, so contributions across all three are added together against the single limit. The additional NPS deduction under Section 80CCD(1B) is separate and sits outside this ceiling.
Does my EPF contribution count towards 80C?
Your own contribution to the Employees' Provident Fund is eligible and counts against the ₹1,50,000 ceiling. Your employer's matching contribution does not, since it is not a payment out of your income, though it has its own treatment under Section 80CCD and the perquisite rules.
What is Section 80C called under the new Income-tax Act, 2025?
Section 123 read with Schedule XV, under the 2025 Act, which took effect on 1 April 2026. Cite both parts: Section 123 sets the ₹1,50,000 ceiling and Schedule XV holds the list of qualifying investments and payments. The amount and the eligible items did not change, but the single section also carries the aggregation that Sections 80CCC and 80CCE performed under the old Act. The additional NPS deduction under 80CCD(1B) and the employer's NPS contribution are in Section 124 instead.
Worked detail on this section
Current rates, limits, and step-by-step process live in these guides, which are kept updated as the law moves.
Primary sources
Disclaimer
This page explains what a statutory provision does in general terms. It is not a substitute for the bare act, and it is not professional tax or legal advice. Rates, thresholds, and limits change with each Finance Act, and applicability turns on facts specific to you. Confirm anything that affects a real filing with a qualified Chartered Accountant.