Section 80C of the Income Tax Act, 1961 is the most commonly used tax-saving section by individual taxpayers in India. It allows deductions up to ₹1.5 lakh per financial year from total income.
But who is actually eligible to claim this benefit – and what kinds of expenses or investments qualify?
This blog explains who can claim deductions under Section 80C, which instruments are covered, and how to plan smartly for FY 2024-25.
Legal Reference
- Section 80C, Income Tax Act, 1961
- Applicable from AY 2006-07 onwards
- Limit: ₹1,50,000 per financial year (combined with 80CCC and 80CCD(1))
Who Can Claim Tax Benefits Under Section 80C?
The following persons are eligible to claim deductions under Section 80C:
- Individual taxpayers (including salaried, professionals, freelancers, self-employed)
- Hindu Undivided Families (HUFs)
Not eligible: Companies, LLPs, partnership firms, and AOPs (Association of Persons)
Eligible Investments and Payments Under Section 80C
You can claim deduction under Section 80C for:
- Employee Provident Fund (EPF) contributions
- Public Provident Fund (PPF) deposits
- Life Insurance Premiums (self, spouse, children)
- Equity Linked Savings Scheme (ELSS) mutual funds
- 5-year tax-saving fixed deposits with banks
- Tuition fees for up to 2 children
- Principal repayment of home loan
- National Savings Certificate (NSC)
- Sukanya Samriddhi Yojana (SSY) for girl child
- Senior Citizen Savings Scheme (SCSS)
- NABARD Rural Bonds (if eligible)
Conditions to Keep in Mind
- Investments/payments must be made within the same financial year
- Life insurance must be in the name of taxpayer, spouse or children – not siblings or parents
- Tuition fees must be for full-time education in India (school, college, university)
- Deduction is allowed on payment basis, not accrual
- Only the principal component of home loan EMIs is eligible (interest under Section 24)
Example Scenarios
- Example 1: Shweta pays ₹75,000 to LIC, ₹30,000 to PPF, and ₹45,000 to ELSS
- Total eligible amount = ₹1.5 lakh ⇒ Full 80C deduction available
- Example 2: Manoj pays ₹2.2 lakh towards tuition fees, LIC, and ELSS
- Max claim under 80C = ₹1.5 lakh
- Example 3: Kiran pays ₹60,000 life insurance for parents
- Not eligible (parents not allowed under 80C)
Common Mistakes to Avoid
- Claiming 80C on life insurance for siblings or parents
- Forgetting to include tuition fees or EPF in total
- Investing after March 31 and expecting deduction in that year
- Confusing interest on home loan (Section 24) with principal (Section 80C)
Conclusion
Section 80C is the foundation of tax-saving for most individual taxpayers. To maximize its benefit, plan investments early, ensure correct documentation, and avoid claiming ineligible items.
With proper planning, you can reduce your tax liability by up to ₹46,800 (at 31.2% slab) through 80C alone.
Call to Action
Wondering which 80C options are best for you – insurance, ELSS, or home loan?
Get a personalized tax-saving strategy tailored to your income, slab, and financial goals.
Book your consultation with Anshul Goyal, Chartered Accountant, and start saving smarter.
https://calendly.com/anshulcpa
Disclaimer
This blog is for general awareness and should not be treated as legal or investment advice. Section 80C rules are subject to change based on annual Union Budgets or CBDT circulars.
Anshul Goyal is a Chartered Accountant licensed with the ICAI, India.
For personalized advice, always consult a qualified tax professional.
Frequently Asked Questions
1. What is the limit for 80C deduction?
₹1.5 lakh per financial year (combined with 80CCC and 80CCD(1))
2. Can NRIs claim Section 80C benefits?
Yes, for certain investments like life insurance, ELSS, and PPF (if allowed)
3. Can I claim 80C for life insurance paid for parents?
No. Only for self, spouse, or children
4. Can I claim both EPF and PPF under 80C?
Yes, subject to combined limit of ₹1.5 lakh
5. Is investment in mutual funds eligible under 80C?
Only if invested in ELSS mutual funds (3-year lock-in)