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What the section allows
Section 80C of the Income-tax Act, 1961 lets you reduce your taxable income by the amount you invest in, or pay towards, a list of approved items — up to a combined ₹1,50,000 in a year. From Tax Year 2026-27 the same deduction sits in section 123 of the Income-tax Act, 2025. The limit and the list of items carry over.
What counts towards the ₹1.5 lakh
- Employee's own contribution to EPF and VPF (the employer's share does not count here)
- Public Provident Fund (PPF) — up to ₹1.5 lakh a year, 15-year account
- ELSS mutual funds — the shortest lock-in among 80C options (3 years)
- Life-insurance premium for self, spouse or children (premium above 10% of the sum assured is not eligible for policies issued after 1 April 2012)
- Tuition fees for up to two children — full-time education in India, tuition component only
- Principal repayment of a home loan, plus stamp duty and registration on the purchase
- Sukanya Samriddhi Yojana, NSC, Senior Citizens' Savings Scheme and 5-year tax-saver bank FDs
- Pension-fund contributions under 80CCC and your own NPS contribution under 80CCD(1) — inside the same ₹1.5 lakh cap
Old regime only — check before you invest
The new regime s.115BAC→s.202 does not allow 80C. Since the new regime is the default, the deduction helps only if you actively choose the old regime — salaried people choose it in the ITR each year; people with business income use Form 10-IEA (new Form 44). Run both regimes before buying a tax-saving product for the deduction alone.
Proof your employer or the department may ask for
Premium receipts, PPF passbook or statement, ELSS account statement, tuition-fee receipts showing the tuition component, home-loan interest-and-principal certificate, and stamp-duty receipts. Employers collect these through the investment declaration (Form 12BB, new Form 124).
Worked example
Example: Ritu earns ₹10 lakh salary. EPF ₹43,200 + PPF ₹60,000 + LIC ₹25,000 + child's tuition ₹40,000 = ₹1,68,200. Her 80C deduction is capped at ₹1,50,000. In the old regime that saves up to ₹31,200 (20% slab + 4% cess). Whether the old regime is better overall depends on her other deductions — the new regime gives zero tax up to ₹12 lakh of taxable income anyway.
Common mistakes
- Claiming 80C while filing in the new regime — it is simply not allowed
- Counting the employer's PF share — only your own contribution qualifies
- Claiming the full school fee — transport, development and annual charges are not tuition
- Forgetting that a house sold within 5 years of possession reverses the principal deduction already claimed
Frequently asked questions
No. Section 80C (section 123 of the 2025 Act) is an old-regime deduction. Under the new regime only a few deductions survive, such as the employer's NPS contribution and the standard deduction.
No. The new Act renumbers the section to 123 but keeps the ₹1,50,000 combined limit.
Each parent can claim tuition fees they actually paid, for up to two children each, within their own ₹1.5 lakh limit.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
