What is Section 80C?
Section 80C is the most popular tax-saving section of the Indian Income Tax Act. It allows you to reduce your taxable income by up to ₹1.5 Lakhs in a financial year by investing in specified instruments or paying certain mandatory expenses.
Eligible 80C Instruments
Many people scramble in March to buy tax-saving products without realizing they may have already exhausted their ₹1.5 Lakh limit through mandatory deductions. Common 80C components include:
- Mandatory: Employee Provident Fund (EPF), Children’s Tuition Fees, Home Loan Principal Repayment.
- Voluntary Investments: ELSS Mutual Funds, Public Provident Fund (PPF), National Savings Certificate (NSC), 5-Year Tax Saver FDs, and Life Insurance Premiums.
New Tax Regime Exclusion
The Section 80C deduction is only available under the Old Tax Regime. If you opt for the New Tax Regime, investments in PPF, ELSS, or LIC will not provide any tax benefits, though they may still be good investments for wealth creation.