The 80C Basket: Tax-Saving Investments

The common investments and expenses that qualify for the popular 1.5 lakh rupee deduction under the old regime, and how to choose among them.

Under the old tax regime, the deduction long known as Section 80C lets taxpayers reduce taxable income by up to 1.5 lakh rupees a year through specified investments and expenses.

What qualifies

Employee Provident Fund contributions.
Public Provident Fund (PPF).
Equity Linked Savings Schemes (ELSS): tax-saving mutual funds with a three-year lock-in.
Life insurance premiums.
National Savings Certificates (NSC).
Five-year tax-saving fixed deposits.
Sukanya Samriddhi Yojana.
Home loan principal repayment.
Tuition fees for up to two children.
Senior Citizens Savings Scheme.

Choosing wisely

Don’t invest just to save tax; consider:

Returns: ELSS invests in equities with higher long-term potential and risk; PPF and NSC are safe with fixed returns.
Lock-in: ELSS has the shortest lock-in at three years; PPF runs 15 years.
Liquidity.
Insurance: buying expensive life insurance policies mainly for tax saving is often poor value; term insurance plus separate investments is usually better.

Often already used

Many salaried employees already use much of the limit through EPF, tuition fees or home loan repayments, so they need less extra investment.

New regime

The new regime doesn’t allow 80C deductions. Since it became the default and was made more attractive in 2025, many taxpayers no longer benefit from 80C.

Additional NPS deduction

Under the old regime, an extra 50,000 rupees deduction is available for personal NPS contributions, beyond the 80C limit.

The last-minute rush

In March, an employee rushes to buy an insurance policy to save tax, without checking whether it suits her. A better plan would have been to check her EPF and compare ELSS or PPF earlier in the year.

Thinking every taxpayer should fill the 80C limit

80C only helps under the old regime, and investments should suit your goals, not just save tax.

Key takeaways

The old regime allows up to 1.5 lakh rupees of 80C deductions.
EPF, PPF, ELSS, insurance, tuition fees and home loan principal qualify.
ELSS has the shortest lock-in; PPF is safe but long-term.
The new regime doesn't allow 80C deductions.