Section 80C Deduction (Section 123) — Optimise Your ₹1.5 Lakh
The single most-used deduction for individuals: up to ₹1,50,000 a year across EPF, PPF, ELSS, life insurance, home-loan principal, tuition fees and more. Use the optimiser below to see how much of your limit is used, what headroom is left, and the exact tax you save — under the Income-tax Act, 2025 (Section 123, list in Schedule XV) and the Act, 1961 (Section 80C).
80C Basket Optimiser
Enter what you already invest or spend. The tool caps it at ₹1.5 lakh, shows your headroom, and computes the tax saved.
What Section 80C (now Section 123) covers
Section 80C lets an individual or HUF reduce taxable income by up to ₹1,50,000 a year for a defined set of savings, investments and expenses. Under the new Income-tax Act, 2025 the provision continues as Section 123, with the eligible list moved to Schedule XV; the ₹1.5 lakh ceiling and the qualifying items are unchanged from the old Section 80C. It is the workhorse deduction of the old regime — but it is not available under the new (default) regime.
The ₹1.5 lakh is a shared ceiling
The limit is a combined one. Contributions under Section 80C, Section 80CCC (pension plans) and Section 80CCD(1) (your own NPS) are added together and capped at ₹1,50,000 in total — historically through Section 80CCE. So you cannot claim ₹1.5 lakh under each; they share one ₹1.5 lakh pool. The only NPS piece that sits outside this pool is the extra ₹50,000 under Section 80CCD(1B).
Eligible investments and expenses — with lock-ins
| Instrument | Type | Lock-in / condition |
|---|---|---|
| EPF — employee provident fund | Retirement | Till retirement or rule-based withdrawal |
| PPF — public provident fund | Fixed income | 15 years (partial withdrawal from year 7) |
| ELSS — equity mutual funds | Equity | 3 years — the shortest lock-in in 80C |
| Life insurance premium | Insurance | Premium up to 10% of sum assured (policies after 1 Apr 2012); keep policy 2+ years |
| ULIP | Insurance + market | 5 years |
| NSC — National Savings Certificate | Fixed income | 5 years (accrued interest reinvested also qualifies) |
| 5-year tax-saving FD | Fixed income | 5 years, with a scheduled bank or post office |
| Sukanya Samriddhi | Girl child | For a girl under 10; long tenure, high interest |
| SCSS — Senior Citizens Savings Scheme | Fixed income | Age 60+; 5-year tenure |
| NPS under 80CCD(1) | Retirement | Within the ₹1.5L pool; till age 60 broadly |
| Home-loan principal | Housing | Do not sell the house within 5 years, else reversed |
| Stamp duty and registration | Housing | Only in the year the house is bought |
| Children tuition fees | Expense | Full-time education in India, max 2 children, tuition only |
Tuition fees mean the tuition component only — not donation, development fees or capitation. Life insurance on self, spouse or any child qualifies; for a HUF, on any member.
Old Act 1961 vs new Act 2025 — numbering
Income-tax Act, 1961
- Deduction: Section 80C
- Combined ₹1.5L ceiling: Section 80CCE
- Extra NPS ₹50,000: Section 80CCD(1B)
- Applies for FY 2025-26 and earlier
Income-tax Act, 2025
- Deduction: Section 123 (eligible list in Schedule XV)
- NPS: Section 124
- Limit and items unchanged — ₹1.5 lakh
- Applies from Tax Year 2026-27 (1 April 2026)
A worked example
Priya, 30% slab, salaried (old regime)
| EPF (own contribution) | ₹60,000 |
| ELSS | ₹50,000 |
| Life insurance premium | ₹25,000 |
| Children tuition fees | ₹40,000 |
| Total 80C entered | ₹1,75,000 |
| Deduction allowed (capped) | ₹1,50,000 |
| Tax saved (30% + 4% cess) | ₹46,800 |
Priya crossed the limit by ₹25,000, which gives no extra 80C benefit. If she instead puts that ₹25,000 into NPS under 80CCD(1B), she gets a further ₹25,000 deduction and saves about ₹7,800 more in tax.