Section 80C is the most-used tax-saving section. It allows you to deduct up to ₹1.5 lakh per financial year from your taxable income, but only under the old regime. The instruments that qualify and how to pick between them are the focus of this chapter.

The ₹1.5 lakh ceiling

The ₹1.5 lakh limit covers the sum of all 80C, 80CCC (pension plans), and 80CCD(1) (employee NPS contribution) instruments. NPS 80CCD(1B) — the additional ₹50,000 — sits outside this ceiling.

The 80C menu

Public Provident Fund (PPF)

• 15-year lock-in (extendable in 5-year blocks)
• Current rate: 7.1% per annum (reviewed quarterly)
• Interest is fully tax-exempt
• Maturity proceeds tax-exempt — EEE status
• Max contribution: ₹1.5 lakh per year per individual
• Best for: long-horizon debt allocation, retirement, child's higher education

Equity-Linked Savings Scheme (ELSS)

• 3-year lock-in — shortest among 80C options
• Equity mutual fund, returns market-linked (historical 12-14%)
• Gains taxed as equity LTCG (12.5% above ₹1.25 lakh exemption)
• Best for: investors with risk appetite who want growth + 80C in one go

Employee Provident Fund (EPF)

• Mandatory for most salaried employees
• Employee contribution counts under 80C (employer contribution does not eat 80C)
• Current rate: 8.25% per annum
• Tax-exempt up to ₹2.5 lakh annual employee contribution; interest on excess is taxable

National Pension System (NPS) Tier 1

• Employee contribution under 80CCD(1) counts within ₹1.5 lakh 80C ceiling
• Additional ₹50,000 under 80CCD(1B) is over and above 80C
• Long lock-in until age 60
• 40% of maturity must be annuitised (taxable as pension)

Sukanya Samriddhi Yojana (SSY)

• For girl child under 10, opened by parent
• Current rate: 8.2% per annum, EEE
• Matures when girl turns 21
• Max ₹1.5 lakh per year per girl

National Savings Certificate (NSC)

• 5-year lock-in
• Current rate: 7.7% per annum, compounded annually
• Interest reinvested is treated as fresh investment (eligible for 80C) for first 4 years

Tax-saving Fixed Deposit

• 5-year lock-in
• Interest taxable at slab rate
• Convenient via your bank, but tax-inefficient compared to PPF

Life insurance premiums

• Premiums for self, spouse, children qualify
• Sum assured must be at least 10x annual premium for full 80C benefit (post-2012 policies)
• ULIPs and endowment plans qualify but are usually poor on the investment side

Home loan principal repayment

• The principal portion of EMI qualifies (interest is 80EE / Section 24)
• Property must not be sold for 5 years after possession, else benefit is reversed

Children's tuition fees

• For up to 2 children, full-time education in India
• Only tuition fee — not development fees, transport, etc.

How to pick the right mix

Conservative (40-year-old, low risk appetite): ₹1.5 lakh into PPF.

Balanced (30-year-old, moderate appetite): ₹50k PPF + ₹1 lakh ELSS.

Aggressive (25-year-old, high appetite, long horizon): ₹1.5 lakh ELSS, plus ₹50k NPS 80CCD(1B) for the bonus deduction.

Parent of a girl: Prioritise SSY for the girl child's portion, fill the rest with PPF or ELSS.

Common 80C mistakes

• Buying ULIPs purely for 80C — high charges, poor returns, locked for years
• Buying endowment LIC policies purely for 80C — 4-5% returns over 20 years
• Forgetting that EPF already eats into 80C — many salaried investors over-invest by ₹50-60k
• Choosing tax-saving FD over PPF — same lock-in, worse after-tax return

If you are on the new regime

None of this applies for tax-saving purposes — 80C is unavailable. PPF, ELSS, NPS still make sense on investment merits, but not for tax.

Next chapter: Section 80D and the lesser-known deductions.