Section 80C under Income Tax Act offers some of the popular tax-saving investments in India. Whether it is an ELSS fund, PPF, EPF, ULIP, SSY, or tax saver FDs, these instruments allow you to claim deductions up to ₹1.5 lakh under this section. This is not just about saving tax for the investors, but about aligning financial goals with structured, disciplined investing.
Read ahead to know about Section 80C under the Income Tax Act 1961, 80C investment options, lock-ins, maturity, and more.
What are the 80C Tax Saving Options?
Section 80C tax saving options allow individuals to claim deductions of up to ₹1.5 lakh and reduce their taxable liability. These include market-linked investments such as ELSS and ULIP, government-backed schemes such as PPF, EPF, NSC, tax saver FDs, SSY, and SCSS, and expenses like home loan principal repayment and children’s tuition fees.
These options differ in risk, lock-in period, and return/interest, which makes it important to align your 80C investment choices with your financial goals and tax planning strategy.
What Is Section 80C of the Income Tax Act?
Section 80C is a tax deduction provision under the old tax regime. This section reduces their tax liability by investing or spending in certain specified instruments and expenses during a financial year. It allows deductions of up to ₹1.5 lakh per year. The deduction is applied to gross total income, thereby lowering the amount on which income tax is calculated.
Best 80C Investment Options
Here are the best 80C investment options for 2026!
1. Equity Linked Savings Scheme (ELSS)
ELSS are tax-saving mutual funds that primarily allocate capital to equities. This qualifies for deduction under Section 80C. ELSS delivers market-linked returns and carries a mandatory 3-year lock-in period. The scheme further applies to LTCG taxation rules, where capital gains under ₹1.25 lakh are exempted from taxation, and beyond that, 12.5% is charged.
2. Public Provident Fund (PPF)
PPFs are government-backed long-term savings schemes, which offer up to 7.1% interest per annum with a lock-in period of 15 years. Also, PPF falls under Exempt, Exempt, Exempt (EEE), which makes the contribution, interest, and withdrawal tax-free. The PPF account contribution can claim deductions of ₹1.5 lakh per year under Section 80C.
3. Employee Provident Fund (EPF)
EPF is a retirement tax-savings scheme, under which contributions made by the salaried individuals qualify for deduction under Section 80C. It offers an interest of 8.25% as of February 2026, and doesn’t have any lock-in period, and the contributions are usually made until retirement. However, employees’ contributions do not apply to the deductions.
4. National Savings Certificate (NSC)
NSC is a government-supported scheme offering 7.7% annual interest with a fixed maturity period of five years. Under this, investment up to ₹1.5 lakh qualifies under 80C. The interest is taxable, but it can be reinvested to qualify for deductions in the first 4 years.
5. Tax Saving Fixed Deposits (FD)
Tax-saving FDs are special savings schemes that offer an average interest of up to 8.40%, as of 10 December 2025, with a lock-in period of 5 years, which qualifies under 80C. The interest is taxable.
6. Unit Linked Insurance Plan (ULIP)
An ULIP combines life insurance and market-linked investment, and annual premiums paid up to ₹1.5 lakh qualify under Section 80C for tax deduction. ULIP provides around 8–10% of average interest, with a lock-in period of 5 years.
7. Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) builds a long-term corpus especially for girl children for education and marriage. It offers an average interest of up to 8.2%, and contributions up to ₹1.5 lakh are deductible under 80C. Here, both interest & redemption value are tax-free under EEE. The scheme allows 50% withdrawal after the age of 18 and matures when the girl turns 21.
8. Senior Citizen Savings Scheme (SCSS)
SCSS is a retirement scheme supported by the government with an initial tenure of 5 years, extendable by an additional three years. The scheme offers 8.2% average interest, and deductions of up to ₹1.5 lakh under Section 80C.
9. Home Loan Principal Repayment
The principal of a home loan is eligible for deduction under Section 80C, subject to the overall annual limit of ₹1.5 lakh. The deduction applies only if the property is possessed and held for 5 years, or else the earlier claims will be reversed and taxed. Additionally, stamp duty and registration charges are also eligible as a one-time claim.
10. Tuition Fees for Children
The tuition fees paid for full-time education in India qualify for deduction within the ₹1.5 lakh overall limit. The deduction is applicable up to two children for each parent. Here, the tuition fee component is qualified, and other components such as development fees, donations, transport, hostel charges, and coaching classes are excluded.
How Much Deduction Can You Claim Under Section 80C?
Section 80C permits individuals to claim deductions up to ₹1.5 lakh in a financial year.
However, this ₹1.5 lakh deduction is a combined ceiling, not per investment, and all eligible investments and expenses, such as EPF, PPF, ELSS, life insurance premium, home loan principal repayment, tuition fees, NSC, etc., cannot exceed ₹1.5 lakh for deduction purposes.
How to Claim 80C Deductions (Step‑by‑Step)
To successfully claim a deduction under Section 80C follow this structured process:
| Step–1 | Invest before 31 March | You must invest in eligible instruments before 31 March in a financial year. |
| Step–2 | Collect & maintain proof | Maintain documentary evidence such as PPF deposit receipts, ELSS statements, Home loan principal certificate, etc. |
| Step–3 | Declare investments to employer | If you’re a salaried individual, you must declare investments to your employer for adjusting TDS. |
| Step–4 | File ITR & Report under chapter VI-A | Report eligible amounts under Deductions under Chapter VI-A under Section 80C. |
Comparison Table — Risk, Lock‑in & Returns
The following table compares the best 80C investment options to make it easier for the investors to choose from:
| Options | Average Interest | Risk Level | Lock-in Period |
| ELSS Funds | 12–15% | High | 3 years |
| PPF Schemes | 7.10% | Low | 15 years |
| EPF Schemes | 8.25% | Low | Until retirement |
| NSC Schemes | 7.70% | Low | 5 years |
| Tax Saving FDs | 8% | Low | 5 years |
| ULIPs Funds | 8–10% | Medium | 5 years |
| Sukanya Samriddhi Yojana | 8.20% | Low | Until the age of 18/21 |
| SCSS | 8.20% | Low | 5 years, can be extended up to 3 years |
How to Choose the Right 80C Investment for Your Goals
- Assess risk & goals: If you want high growth and can handle market risk, you can choose ELSS funds. But if you’re looking for stable, guaranteed returns, opt for PPF, NSC, or Tax-saving FDs.
- Check investment horizon: If your financial goals are shorter, say around 3 years, ELSS will fit. However, long-term goals such as retirement, schemes like PPF will be more suitable.
- Review existing deductions: EPF, insurance premiums, and home loan principal may already use up part of the ₹1.5 lakh limit. Therefore, you must make calculated decisions before additional investments.
- Consider life stage: You may choose SSY for long-term tax-free savings for your girl child, and for retirement goals, you might prefer SCSS for fixed returns.
- Evaluate liquidity: ELSS locks funds for 3 years, NSC and FDs lock funds for 5 years, and PPF locks funds for 15 years. Therefore, you must choose based on access needs.
80C Investment Mistakes to Avoid
- Investing only to save tax: You must not choose products just to exhaust ₹1.5 lakh without aligning it with your financial goals.
- Ignoring lock-in periods: Blocking money in long-tenure instruments like PPF without assessing liquidity needs.
- Overlooking existing deductions: Not accounting for EPF, insurance premiums, or home loan principal that is already covering a part of the limit.
- Misjudging risk levels: You must avoid investing in ELSS without understanding market volatility or choosing low-return products without evaluating inflation impact.
Conclusion
Section 80C investment options remain one of the most structured ways to reduce taxable income under the old tax regime. With a combined deduction limit of ₹1.5 lakh, the real advantage lies in choosing instruments aligned with risk appetite, time horizon, and life stage. Whether it is market-linked ELSS or stable options like PPF and EPF, disciplined allocation ensures tax efficiency without compromising long-term financial goals.
FAQ‘s
The best 80C investment options depend on your goals and risk profile. ELSS offers market-linked growth, while PPF, EPF, NSC, and tax-saving FDs provide stable returns. SSY and SCSS cater to specific life stages such as child planning and retirement.
ULIP can be suitable if you want insurance coverage combined with market-linked investment. It has a 5-year lock-in and returns depend on fund performance. However, charges and risk levels should be evaluated before investing.
You can claim a maximum deduction of ₹1.5 lakh per financial year under Section 80C. The actual tax saved depends on your income tax slab. The higher your slab, the greater the effective tax saving.
Yes, the principal portion of a housing loan EMI qualifies for deduction under Section 80C within the ₹1.5 lakh limit. Stamp duty and registration charges are also eligible as a one-time claim.
Yes, investments made through SIP in ELSS funds qualify for deduction under Section 80C. The total invested amount during the financial year, up to ₹1.5 lakh, can be claimed.
PPF has a 15-year lock-in with partial withdrawal provisions after certain years. ELSS has the shortest lock-in among 80C options at 3 years from each investment date.
