Section 80C — Tax Saving Options (Up to ₹1,50,000) — Guide & Calculator
Updated: 2025 — This guide covers what qualifies under Section 80C of the Income Tax Act, practical examples, recommended strategies, and an interactive calculator to plan your allocation.
Section 80C remains the single most important section for individual taxpayers looking to reduce taxable income in India. Under Section 80C (and closely related sections like 80CCC, 80CCD(1)), taxpayers can claim deductions for certain investments and payments up to a combined maximum of ₹1,50,000 in a financial year. Understanding how each eligible head works helps you choose smarter options for tax efficiency and financial goals.
What does Section 80C cover?
Below are the most common, widely used 80C eligible heads. This is not exhaustive — other qualifying investments exist but these are the ones most taxpayers use:
- Public Provident Fund (PPF) — long-term, risk-free, tax-free interest at government-set rates; 15-year lock-in with extensions.
- Employee Provident Fund (EPF) — employer/employee contributions while salaried; part of 80C.
- Equity Linked Savings Scheme (ELSS) — mutual funds with a 3-year lock-in; higher risk, potentially higher returns; shortest lock-in in 80C options.
- Life Insurance Premiums — for policies taken on self, spouse, or children (term insurance premiums favored over endowments for efficiency).
- NSC (National Savings Certificate) — fixed-income instrument with compounded interest; invested amounts qualify for 80C.
- 5-year Tax Saving Bank Fixed Deposits — tax saving FDs with 5-year lock-in.
- Principal repayment on home loan — principal component paid during the year is eligible under 80C.
- Tuition fees — for up to two children for full-time education (subject to rules).
- Senior Citizen Savings Scheme, Sukanya Samriddhi Account — specialized schemes with 80C benefits for targeted use cases.
How Section 80C works — simple example
Suppose your gross taxable income (before deductions) is ₹8,00,000. You invest ₹1,50,000 in 80C eligible instruments across PPF, ELSS and life insurance. Your taxable income reduces to ₹6,50,000 (₹8,00,000 − ₹1,50,000). Tax is then computed on ₹6,50,000 according to slab rates for that year. This reduces the tax liability and the effective tax payable.
Which 80C choice is best for you?
There’s no single best instrument — the right mix depends on your goals:
- Shorter lock-in, equity exposure & growth: ELSS.
- Low risk & tax-free interest: PPF.
- Secure retirement savings via salary: EPF.
- Home ownership + tax relief: use principal repayment under 80C and interest under Section 24 (subject to limits).
Practical strategies
1) If you want to maximize tax saving each year, plan a calendar. Identify recurring SIPs in ELSS and annual PPF/top-up dates so you don’t miss the ₹1.5L limit.
2) Use ELSS for early investors seeking capital appreciation with a 3-year lock-in (good for younger investors with risk tolerance).
3) Prefer term insurance for protection instead of traditional endowments — term + ELSS/PPF tends to be more efficient for many taxpayers.
Interactive Section 80C Calculator
Use the calculator below: check the instruments you invested/planned, enter the amounts (₹). The page will compute the Total invested, show whether you exceed the ₹1,50,000 limit and display each head's percentage of the limit.
| Investment Head | Select | Amount (₹) | % of ₹1,50,000 |
|---|---|---|---|
| Life Insurance Premium | 0% | ||
| ELSS (Mutual Funds) | 0% | ||
| PPF (Public Provident Fund) | 0% | ||
| EPF (Employee Provident Fund) | 0% | ||
| NSC (National Savings Certificate) | 0% | ||
| 5-year Tax Saving FD | 0% | ||
| Home Loan Principal Repayment | 0% | ||
| Tuition Fees (children) | 0% | ||
| Others (Sukanya Samriddhi, ULIPs, etc.) | 100% |
Tip: Check only the options you have invested in or plan to invest.
Common questions about Section 80C
Can I claim multiple instruments under 80C?
Yes. 80C is a combined limit for many instruments — you can combine PPF, ELSS, life insurance premiums, home loan principal, etc., but the total deduction across these is capped at ₹1,50,000.
Is employer contribution to EPF included?
Yes — employer contribution to EPF that is taxable is often eligible under 80C (subject to rules). Provident funds and pension contributions have specific rules — consult your payroll/CA for exact treatment.
Are returns on PPF/ELSS taxable?
PPF interest is tax-free. ELSS returns (equity mutual funds) are subject to capital gains tax rules: long-term capital gains (beyond 1 lakh exemption in a financial year) may apply; check the current capital gains rules before investing.
Final notes & strategy summary
Use the calculator above to prioritize and allocate contributions. Younger investors may prefer ELSS for growth and shorter lock-in. Those seeking security can prioritize PPF and EPF. Home-buyers should factor principal repayment under 80C and interest under Section 24. Always document proofs of investments to support your deductions at the time of filing.
Want a customised plan? I can create a simple planner for your income & goals — request a personalised allocation and I’ll prepare a recommended split for tax and wealth building.