Section 80C of the Income Tax Act allows individual taxpayers to claim deductions up to ₹1.5 lakh per year on specified investments and expenses, available only under the old tax regime.
Section 80C of the Income Tax Act, 1961 is the most widely used tax-saving provision for Indian salaried taxpayers. It allows individuals and Hindu Undivided Families (HUFs) to claim a deduction of up to ₹1,50,000 per financial year against their gross taxable income for specified investments, contributions and expenses. Section 80C is available only to taxpayers who choose the old tax regime; under the new regime introduced in Section 115BAC, this deduction is not allowed. For an employee in the 30% slab, fully utilising the limit translates to a direct tax saving of ₹46,800 (including 4% cess) every year.
The combined deduction available under Section 80C, Section 80CCC (pension fund contributions) and Section 80CCD(1) (employee NPS contribution) is capped at ₹1,50,000 per financial year. This combined cap is set by Section 80CCE. An additional ₹50,000 is available exclusively for NPS Tier I under Section 80CCD(1B), which sits over and above the ₹1.5 lakh limit. The deduction is per individual, not per family — both spouses can independently claim ₹1,50,000 each on their own returns.
Section 80C is not available under the new tax regime. Employees who default to or opt for the new regime cannot use any of the instruments listed below to reduce their taxable income.
| Instrument | Type | Lock-in |
|---|---|---|
| EPF (employee contribution) | Salaried automatic | Until exit / retirement |
| Voluntary Provident Fund (VPF) | Voluntary EPF top-up | Same as EPF |
| Public Provident Fund (PPF) | Govt small-savings | 15 years |
| Equity-Linked Savings Scheme (ELSS) | Mutual fund | 3 years |
| National Savings Certificate (NSC) | Post Office | 5 years |
| Tax-saving Fixed Deposit | Bank FD | 5 years |
| Sukanya Samriddhi Yojana | Girl child savings | Until girl turns 21 |
| Senior Citizen Savings Scheme (SCSS) | For 60+ | 5 years |
| Life Insurance Premium | Self / spouse / children | Premium ≤ 10% of sum assured |
| Tuition Fees | Up to 2 children, full-time Indian institution | Year of payment |
| Home Loan Principal | Self-occupied / let-out property | Property held 5 years |
| NPS Tier I (employee contribution) | Pension | Until 60 |
| ULIP (issued before Feb 2021 ₹2.5L cap) | Unit-linked insurance | 5 years |
| Stamp Duty & Registration Charges | One-time, year of property purchase | Year of payment |
Premium on a life insurance policy is deductible only if the annual premium does not exceed 10% of the sum assured (20% for policies issued before 1 April 2012). For policies on the life of a person with disability under Section 80U or specified disease under Section 80DDB, the threshold is 15%.
The lock-in period is the minimum holding period after which the investor can redeem without losing the 80C benefit. For PPF, the 15-year lock-in is the longest, with partial withdrawals allowed from year 7. ELSS, at three years, is the shortest among 80C options and is also the only one offering equity-linked returns. Tax-saving FDs and NSC are locked for five years and offer fixed but lower post-tax returns.
If a 5-year tax FD or NSC is broken before five years, the deduction claimed in earlier years is reversed and added back to that year’s income. Surrender of a life insurance policy before paying two annual premiums similarly reverses the prior 80C deduction.
The actual rupee saving from Section 80C depends on the marginal slab rate under the old regime:
| Slab | Tax saved on full ₹1.5L use |
|---|---|
| 5% | ₹7,800 (incl. 4% cess) |
| 20% | ₹31,200 |
| 30% | ₹46,800 |
A salaried employee in the ₹15 lakh+ bracket therefore reduces their tax outgo by close to ₹47,000 simply by routing ₹1.5 lakh through an 80C-eligible instrument. EPF contributions alone usually consume a large part of the limit, so most salaried employees only need to top up with PPF, ELSS or insurance to reach the cap.
Two related sub-sections are bundled under the same ₹1,50,000 ceiling:
These two sections share the ₹1.5 lakh cap with Section 80C under the umbrella of Section 80CCE. Only Section 80CCD(1B) — the additional ₹50,000 NPS contribution — sits outside this combined cap.
The new tax regime under Section 115BAC was introduced to simplify the tax structure. It offers lower slab rates and a higher rebate threshold (full rebate up to ₹7 lakh taxable income via Section 87A) in exchange for foregoing most exemptions and deductions, including Section 80C, 80D, HRA, LTA and home-loan interest on self-occupied property. The trade-off is deliberate — taxpayers without significant investments or rent benefit from the lower slab rates, while those with structured investments and high rent often still prefer the old regime.
Salaried employees can choose between regimes every year by indicating their preference to the employer at the start of the financial year and filing the appropriate ITR. Taxpayers with business or professional income face restrictions on switching back to the old regime once they move to new.
Omnivoo collects each employee’s investment declarations during onboarding and the annual window, validates them against the ₹1,50,000 cap (and the ₹50,000 80CCD(1B) extra), and recomputes monthly TDS the moment a declaration changes. The platform also flags the most common mistakes — sum-assured cap breaches, double-counted EPF, and old-regime deductions claimed under new — before they cause a year-end TDS shortfall.
CTC is the total annual expenditure an employer incurs on an employee, including salary, allowances, benefits, and statutory contributions.
Form 16 is an annual TDS certificate issued by an employer to each employee, summarizing salary paid and income tax deducted during the financial year.
PF is a mandatory retirement savings scheme in India where both employer and employee contribute 12% of basic salary plus dearness allowance each month.
TDS is the income tax an employer withholds from an employee's salary each month and deposits with the government on their behalf.
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