Deduction under section 80C of the Income Tax Act 1961, allows taxpayers to reduce their taxable income by making specific investments or incurring certain expenses. This section is popular for its tax-saving benefits.
Who are eligible to claim section 80C deduction?
- Individuals – Indian residents and Non Resident Indians are eligible
- HUFs
Who are cannot claim deduction under section 80C?
- Companies
- Partnership Firms
- LLPs
What is the maximum deduction limit under Section 80C?
Maximum Limit is INR 1,50,000.
Minimum Holding Period for Various Investments under Section 80C
| Investment options | Minimum Holding Period |
| Fixed Deposit | 5 years |
| PPF | 15 years |
| NSC | 5 years |
| ELSS | 3 years |
| NPS | Till reaches 60 years of age |
| SCSS | 5 years |
| ULIP | 5 years |
| Sukanya Samriddhi Yojana | Till girl child reaches 21 years |
Investments which qualify for deductions under Section 80C?
Investments which are eligible are :
Fixed Deposits (FDs)
FDs have a lock-in period of 5 years and offer a maximum tax exemption of INR 1.5 lakh on the principal amount under Section 80C. The returns are taxable.
Life Insurance Premiums
Premiums which are paid for life insurance policies are eligible for tax benefits under the 80C limit. The benefits apply to policies who held by self, spouse, and dependent children, including Hindu Undivided Family members.
Employee Provident Fund (EPF)
Returns from EPF with interest are eligible for tax exemption u/s 80C for employees who have served atleast 5 years. Voluntary contributions to EPF are eligible for tax exemptions.
Senior Citizen Savings Scheme (SCSS)
SCSS is designed for individuals who are above 60 years and offers attractive returns paid quarterly. Those who opt for voluntary retirement can participate after 55 years.
Principal Repayment on Home Loan
Repayments towards the principal component of home loan EMIs are eligible for deduction under Section 80C. This benefit is available –
- If the property’s construction is complete and the property is not transferred within 5 years.
- If the property is sold within 5 years, the claimed deductions become taxable.
Sukanya Samriddhi Scheme
Sukanya Samriddhi Scheme is an account opened by an individual for a girl child from birth until she turns 10 years old. The minimum investment is INR 1,000, and the maximum is INR 1,50,000 per financial year.
Public Provident Fund (PPF)
Contributions made to the Public Provident Fund are eligible for tax benefit under Section 80C. The maximum deposit limit is INR 1.5 lakh, and the entire amount deposited can be claimed as a tax exemption.
NABARD Rural Bonds
NABARD Rural Bonds are eligible for tax exemption under Section 80C.
Unit Linked Insurance Plans (ULIPs)
ULIPs provide higher returns comparison to traditional insurance and can claim tax benefit upto INR 1.5 lakh on the invested amount.
National Savings Certificate (NSC)
NSC is a popular tax-saving instrument with interest compounded semi-annually and a maturity period of 5 to 10 years. Investments in NSC are exempt up to INR 1.5 lakh per financial year..
Infrastructure Bonds
Investments in infra bonds which are issued by infrastructure companies are eligible for tax exemptions.
Equity-Linked Saving Scheme (ELSS)
ELSS investments qualify for tax deduction under Section 80C up to INR1.5 lakh and have a mandatory 3-year lock-in period.
Stamp Duty and Registration Charges
Stamp duty and registration charges for property ownership are eligible for deductions under Section 80C.
Income Tax Deduction Limits of sub-sections 80C
| Sections and Eligible investments | Maximum Limit (INR) |
| 80C: Investment in ELSS, PPF, Life Insurance Premiums, Tuition Fees, Home Loan Principal, SSY, NSC, SCSS, etc. | 1,50,000 |
| 80CCC: Payment towards annuity plan of LIC or other insurer towards Pension Scheme | 1,50,000 |
| 80CCD(1): Contributions made towards Government Schemes like Atal Pension Yojana or other notified pension schemes. | Employed: 10% of basic salary + DA Self-employed: 20% of gross total income. |
| 80CCE: Combined limit for Sections 80C, 80CCC, and 80CCD(1). | 1,50,000 |
| 80CCD(1B): Additional investment in NPS beyond the Rs 1,50,000 limit under Section 80CCE. | 50,000 |
| 80CCD(2): Employer’s contribution to NPS (outside the Rs 1,50,000 limit under Section 80CCE). | Central government employer: 14% of basic salary + DA Others: 10% of basic salary + DA |
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FAQs
The maximum deduction can be claimed upto INR 2 lakhs under Section 80C+80CCC+80CCD(1)+Section 80CCD(1B).
Yes, but the deduction under 80CCC is part of the overall limit u/s 80C. The combined total deduction for Sections 80C, 80CCC, and 80CCD(1) is Rs 1.5 lakh.
Yes, you can claim 80C without any paperwork. But you can keep documents safe as the tax department may request them if a notice issued.
It is only available under old regime.