Sleet

Section 80C Deductions: Investments That Reduce Taxable Income

Nihit Dobariya
Compliance
6 min read
Quick answer

Section 80C is now Section 123 of the Income-tax Act, 2025, with the same ₹1.5 lakh limit, and it is available only under the old tax regime. Your own EPF contribution counts, along with PPF, ELSS funds, life insurance, NSC, five-year tax-saver deposits, children's tuition fees and home-loan principal.

A close-up image of a hand holding a jar full of coins labeled Savings.

Section 80C lets individuals cut taxable income by up to ₹1.5 lakh a year by investing in specified instruments or paying certain expenses. From 1 April 2026 the same deduction sits in Section 123 of the Income-tax Act, 2025, with the same ₹1.5 lakh limit. It is available only under the old tax regime, and employees on the new regime cannot claim it.

Key points covered in this guide: What qualifies, How the limit works, How employees claim through the employer, Why a late declaration hurts, Which regime is better

What qualifies

  • ✓Employee Provident Fund. Your own monthly PF contribution counts automatically.
  • ✓Public Provident Fund (PPF). A government-backed long-term savings scheme.
  • ✓ELSS mutual funds. Equity funds with a three-year lock-in.
  • ✓Life insurance premiums. For the policy holder, spouse and children, within conditions.
  • ✓National Savings Certificate and five-year tax-saver fixed deposits.
  • ✓Tuition fees paid for up to two children.
  • ✓Principal repayment on a home loan.
  • ✓Sukanya Samriddhi Account for a girl child.
Cheerful office celebration with colorful balloons and diverse team indoors.
Statutory filings reward teams that review the paperwork before the deadline, not on it.

How the limit works

The ₹1.5 lakh cap is shared across all of these. If your EPF alone is ₹60,000, you have ₹90,000 of room for other investments. Putting in more than the limit gives no extra benefit under this section.

Since the PF ceiling rose to ₹25,000 on 17 September 2026, employees on higher basic pay may now have a larger own contribution counting toward the limit.

How employees claim through the employer

At the start of the year, employees declare their planned investments on Form 124 (earlier Form 12BB). The employer uses this to reduce monthly TDS. Near the end of the year, the employee submits proofs such as receipts and certificates, and TDS is adjusted for the rest of the year.

A worker sits in a dimly lit industrial workshop with sparks flying from machinery.
Statutory filings reward teams that review the paperwork before the deadline, not on it.

Why a late declaration hurts

If proofs arrive only in March, the employer will have deducted more tax than needed, and the employee waits for a refund when filing. Submitting proofs early avoids the March shock.

Which regime is better

Compare both regimes every year. The new regime has lower slabs and a rebate up to ₹12 lakh of taxable income, but no deduction for Section 123, HRA or LTA. The old regime can win if your deductions are large. Run the numbers, or use the income tax regime calculator.

Sources

Nihit Dobariya

Written by

HR Manager, Airwix Technologies (Sleet)

Nihit Dobariya is the HR Manager at Airwix Technologies in Ahmedabad, where he runs HR and payroll for the team behind Sleet. He writes about payroll, PF and ESIC, professional tax, the labour codes and everyday HR practice for Indian employers, and checks each rule against the official notification before it is published.

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