How Section 80C works
You claim the deduction by investing in or paying eligible items during the financial year, such as EPF, PPF, life insurance premiums, ELSS mutual funds, the principal on a home loan, five-year tax-saving deposits and children's tuition fees. The total, capped at Rs 1,50,000, is subtracted from gross total income before tax is calculated.
Why Section 80C matters
Section 80C is the most-used tax deduction in India. At the 20% or 30% slab it can save Rs 30,000 to Rs 46,800 in tax a year, but only if you choose the old regime, since the new regime does not allow it.
How to use the 80C limit well
Section 80C rewards long-term saving by letting you deduct up to Rs 1.5 lakh of qualifying outgo from taxable income. The trick is that several things you already pay often fill part of the limit before you invest a rupee more: your EPF contribution, your home loan principal, and your children's school tuition all count. It is worth totalling these first, then topping up with a deliberate investment such as ELSS or PPF only for the gap that remains.
Because the deduction exists only under the old regime, the decision is really about which regime suits you. If your 80C plus HRA plus other old-regime deductions shelter more than the new regime's lower slabs save, the old regime wins. Run both before you declare your regime for the year, because switching mid-year is restricted for salaried taxpayers.
Frequently asked questions
Is Section 80C available in the new tax regime?
No. Section 80C deductions apply only under the old tax regime. The new regime offers lower slab rates instead of these deductions.
Does EPF count toward the 80C limit?
Yes. Your own EPF contribution counts within the Rs 1,50,000 Section 80C limit, along with PPF, ELSS, insurance and other eligible items.