Section 80C is the most loved section of the Income Tax Act, and for good reason: it lets you cut up to Rs 1.5 lakh from your taxable income every year in the old regime. But many people use it badly, buying products in a March panic. Let us fix that.
What counts under 80C
- ✓Employee Provident Fund (EPF): your monthly contribution counts automatically
- ✓Public Provident Fund (PPF): 15 year lock-in, tax free interest, a classic
- ✓ELSS mutual funds: only a 3 year lock-in, market returns
- ✓Life insurance premiums for yourself, spouse or children
- ✓Children's tuition fees, up to two children
- ✓Principal repayment of your home loan
- ✓5 year tax saver fixed deposits, NSC, Sukanya Samriddhi Yojana
The mistakes to avoid
First, remember the ceiling is Rs 1.5 lakh in total, not per investment. Second, check your EPF before buying anything: many salaried people already fill half the limit through EPF without realising. Third, do not buy expensive insurance policies just for the deduction; a term plan plus ELSS almost always works out better.
Does 80C matter in the new regime?
No, and this surprises people. The new regime does not allow 80C deductions. With zero tax up to Rs 12 lakh in the new regime for FY 2025-26, many filers no longer need 80C for tax saving at all. Invest because the product is good, not only for the deduction.
Not sure which regime your 80C investments actually help in? Upload your documents on Saathi.Tax and see both regimes computed side by side. Our AI even spots LIC and PPF payments in your bank statement that you forgot about.
