How to Save Tax Under Section 80C: The ₹1.5 Lakh Playbook
Every Section 80C option ranked by return, lock-in and risk — and how to pick the right mix for your ₹1.5 lakh limit.
Section 80C lets you deduct up to ₹1.5 lakh from your taxable income — but only if you are in the old tax regime. The catch: not all 80C options are equal. PPF returns ~7.1% tax-free; ELSS can return 12%+ but is market-linked. Here is how to allocate ₹1.5 lakh based on your goals, not just the tax break.
The Full 80C List, Ranked
| Instrument | Expected Return | Lock-in | Risk |
|---|---|---|---|
| ELSS Mutual Funds | 10-14% p.a. | 3 years | Market |
| PPF | ~7.1% tax-free | 15 years | Sovereign |
| EPF (employee share) | ~8.25% | Till retirement | Sovereign |
| NSC | ~7.7% | 5 years | Sovereign |
| 5-yr Tax Saver FD | 6.5-7.5% | 5 years | Bank |
| Sukanya Samriddhi (girl child) | ~8.2% tax-free | 21 years | Sovereign |
| Home loan principal | n/a | n/a | n/a |
| Life insurance premium | n/a | n/a | n/a |
| Children's tuition fees | n/a | n/a | n/a |
The Default Allocation for Most Salaried Indians
EPF usually eats ₹40,000–₹70,000 of your 80C limit automatically. Add term insurance premium (₹15,000–₹25,000) and you are typically left with ₹50,000–₹80,000 to allocate. Put it into ELSS if your horizon is 5+ years — the 3-year lock-in is the shortest of all 80C options and equity returns historically beat PPF over long periods.
- Under 35, long horizon → ELSS-heavy (60-80% of free 80C room)
- Risk-averse or near retirement → PPF + tax-saver FD
- Have a girl child under 10 → Sukanya Samriddhi for her account, ELSS for yours
Estimate your exact tax saving: 80C Calculator → https://calculatordesk.in/80c-calculator
Common Mistakes to Avoid
- Buying ULIPs or endowment plans just for 80C — IRR usually 4-6%
- Forgetting EPF already counts toward your ₹1.5 lakh ceiling
- Choosing tax-saver FD when you have 5+ years horizon (ELSS beats it on returns and lock-in)
- Investing in 80C under the new regime — it gives zero tax benefit there
Frequently Asked Questions
Is the ₹1.5 lakh 80C limit per person or per family?
Per person, per financial year. Spouses can each claim ₹1.5 lakh under their own PAN if both are taxpayers.
Does 80C work in the new tax regime?
No. The new tax regime disallows 80C. If you want 80C benefits you must opt for the old regime when filing your ITR.
Can I claim 80C for my parents' insurance premium?
No. Life insurance premium qualifies under 80C only if paid for self, spouse, or children. Premium for parents falls under 80D (health insurance), not 80C.