Eligible Investments and Their Lock-in Periods
- EPF (Employee Provident Fund): Employee's contribution (12% of basic salary) is automatically eligible. No separate investment needed.
- PPF (Public Provident Fund): Minimum ₹500, maximum ₹1.5 lakh per year. 15-year lock-in with partial withdrawal from year 7. Interest is tax-free.
- ELSS Mutual Funds: 3-year lock-in. Market-linked returns. LTCG above ₹1.25 lakh taxed at 12.5%.
- LIC / Life Insurance Premiums: Premium must not exceed 10% of sum assured (for policies issued after April 1, 2012) to qualify for 80C.
- NSC (National Savings Certificate): 5-year lock-in. Interest accrued annually is also eligible for 80C deduction (deemed reinvestment).
- 5-Year Tax-Saving FD: Available with scheduled banks and post office. 5-year lock-in. Interest is taxable.
- Home Loan Principal Repayment: Principal component of EMI on a home loan for a residential property. Stamp duty and registration charges also qualify in the year of payment.
- Tuition Fees: Full-time education fees for up to two children at any school, college, or university in India. Hostel fees and development fees do not qualify.
- Sukanya Samriddhi Yojana (SSY): For girl child below 10 years. Minimum ₹250, maximum ₹1.5 lakh per year. Interest and maturity are tax-free.
Section 80CCC and 80CCD(1): Related Deductions
Section 80CCC allows deduction for contributions to pension plans of LIC or other insurers. Section 80CCD(1) allows deduction for NPS (National Pension System) contributions — up to 10% of salary for employees, 20% of gross income for self-employed. The combined limit for 80C + 80CCC + 80CCD(1) is ₹1.5 lakh. Additionally, Section 80CCD(1B) allows an extra ₹50,000 deduction for NPS contributions over and above the ₹1.5 lakh limit — this is a separate deduction available only under the old regime.
Old Regime vs New Regime: When 80C Matters
Under the new tax regime, Section 80C is not available. The new regime offers lower slab rates: 0% up to ₹4L, 5% on ₹4-8L, 10% on ₹8-12L, 15% on ₹12-16L, 20% on ₹16-20L, 25% on ₹20-24L, and 30% above ₹24L. The old regime has higher rates (5% on ₹2.5-5L, 20% on ₹5-10L, 30% above ₹10L) but allows 80C and other deductions. For a salaried person with ₹1.5 lakh in 80C investments, ₹50,000 standard deduction, and ₹25,000 in 80D, the old regime saves approximately ₹52,500 in tax at the 30% slab — but the new regime's lower rates may still result in lower overall tax. Always compute both before choosing.