Section 80C (Now Section 123): Complete List of Tax-Saving Investments

From 1 April 2026, the Income-tax Act, 2025 replaced the old Income-tax Act, 1961, and as part of that rewrite, the section numbers were reshuffled. The deduction everyone has known for decades as "Section 80C" is now formally "Section 123" in the new Act. The Rs 1,50,000 annual limit is unchanged, the list of eligible investments is unchanged, and the rules around each instrument are unchanged — only the label moved. Most people, advisors, and even this article will keep calling it "80C" in everyday conversation because that is what everyone still recognises, but if you see "Section 123" on a new tax form, a fund house statement, or your Form 16, know that it is the same deduction.

This guide covers every major instrument eligible under this section, how each one works, and — most importantly — the single biggest misunderstanding that costs people money every year: treating the Rs 1,50,000 limit as if it applies separately to each investment, when it is actually one shared ceiling across all of them combined.

One point to get out of the way early: every deduction under this section, along with 80D (health insurance) and 80G (donations), is available only if you file under the old tax regime. If you opt for the new tax regime, none of these investments reduce your taxable income, no matter how much you put into them. Before making any 80C investment decision, it is worth checking which regime actually saves you more using the Income Tax Calculator, and reading our guide on Which Deductions Survive Under the New Tax Regime.

This is worth repeating clearly because it trips up so many taxpayers: the Rs 1,50,000 limit under Section 80C is a single combined ceiling that applies across every eligible instrument added together — it is not Rs 1,50,000 for PPF, plus another Rs 1,50,000 for ELSS, plus another Rs 1,50,000 for life insurance. If you put Rs 80,000 into PPF and Rs 90,000 into an ELSS fund in the same year, your total eligible claim is capped at Rs 1,50,000, not Rs 1,70,000.

This matters most for salaried employees, because EPF contributions deducted automatically from your salary also count toward this same Rs 1,50,000 limit. Many people forget to account for their EPF deduction and then "double invest" in PPF or ELSS expecting the full amount to be separately deductible, only to find a large chunk of it delivers no additional tax benefit. Before investing anywhere for 80C purposes, check your Form 16 or salary slip for your EPF contribution for the year, and use the Deduction Gap Planner to see exactly how much headroom remains in your Rs 1,50,000 bucket before you invest another rupee.

PPF (Public Provident Fund) is a government-run, long-term savings scheme with a 15-year tenure (extendable in blocks of 5 years). It carries no market risk, and its interest and maturity amount are both fully tax-free — commonly described as "EEE" status (Exempt on contribution, Exempt on growth, Exempt on withdrawal). It suits conservative investors who want a safe, government-backed avenue and can commit to a long lock-in.

ELSS (Equity Linked Savings Scheme) mutual funds are the only market-linked option under Section 80C, investing primarily in equities. They carry the shortest lock-in among all 80C instruments — just 3 years — and, being equity-oriented, are the only 80C option with the potential to beat inflation meaningfully over the long run, though returns are not guaranteed and carry market risk. Because ELSS deserves a detailed comparison of its own against PPF, NSC, FD and NPS, this guide won't repeat those numbers — read our dedicated SIP for Tax Saving — Complete ELSS Guide for the full breakdown, including how SIPs into ELSS work in practice.

NSC (National Savings Certificate) is a government savings bond with a 5-year lock-in and a fixed interest rate declared periodically by the government. It suits investors who want predictable, guaranteed returns without any market exposure, though it lacks the flexibility of a shorter lock-in.

A tax-saver bank fixed deposit is similar in spirit to a regular FD but comes with a mandatory 5-year lock-in and, unlike a normal FD, does not allow premature withdrawal. It is a straightforward option for anyone who already banks with a scheme-offering bank and wants a familiar, low-complexity investment.

EPF (Employee Provident Fund) is the mandatory retirement contribution automatically deducted from a salaried employee's pay every month, with a matching employer contribution. Because it is compulsory, most salaried taxpayers are already using up a meaningful chunk of their Rs 1,50,000 limit before they invest anywhere else — which is exactly why checking your EPF contribution first matters, as covered above. VPF (Voluntary Provident Fund) lets an employee contribute over and above the mandatory EPF amount, on the same terms, for anyone who wants to save more through this route.

Life insurance premiums — for yourself, spouse, or children — are eligible, including ULIP premiums, which count as life insurance for this purpose. There is an important condition: for policies issued after April 2012, the annual premium must not exceed 10% of the sum assured for the premium to qualify for deduction; premiums above that threshold on the excess don't get the 80C benefit. This is a common trap with high-premium, low-cover policies, so it is worth checking this ratio on any policy before assuming the full premium is deductible.

Sukanya Samriddhi Yojana is a scheme specifically for a girl child's future, offering one of the highest fixed rates among government-backed savings schemes. It is a strong option for parents who want a dedicated, safe, long-term corpus for a daughter's education or marriage expenses.

The principal portion of a home loan repayment (EMI) is 80C-eligible — but only the principal component, not the interest. Interest on a home loan is deducted separately under Section 24(b), which we cover in our dedicated Home Loan Interest Tax Deduction guide. Tuition fees paid for up to 2 children — for full-time education at a school, college, or university — also qualify, but this specifically excludes donations, capitation fees, or development fees charged alongside tuition.

Finally, NPS (National Pension System) Tier-1 contributions can be claimed under this section too. However, NPS also carries its own additional, exclusive limits under Section 80CCD(1B) and 80CCD(2), which sit outside and on top of the Rs 1,50,000 ceiling — the important nuance is that a given rupee of NPS contribution can count toward 80C or toward 80CCD(1B), but not both at once. We cover this fully in our NPS Tax Benefits guide.

Here is how the main instruments compare on lock-in, risk, and who they typically suit — for a detailed return-rate comparison of ELSS against PPF, NSC, FD, and NPS specifically, see the ELSS guide linked above.

Rather than picking instruments randomly, start by adding up what you are already contributing without any extra effort: your EPF deduction (check your salary slip or Form 16), any existing life insurance premiums, and your home loan principal repayment if you have one. Subtract that total from Rs 1,50,000 to see how much headroom actually remains — the Deduction Gap Planner does exactly this calculation for you and shows the remaining space in your 80C bucket alongside your 80D and other Chapter VI-A buckets.

Once you know your remaining headroom, choose instruments based on your goals and risk appetite rather than chasing the highest advertised number: PPF or NSC if you want zero market risk and don't mind a long lock-in, ELSS if you're comfortable with market ups and downs in exchange for the shortest lock-in and long-term growth potential, Sukanya Samriddhi if you have a daughter, and VPF if you're salaried and want a simple, no-decision-required top-up to your existing EPF.

And remember the regime check comes first: run your numbers through the Income Tax Calculator to confirm the old regime (where these deductions apply) actually works out better for you than the new regime before committing fresh money to any 80C instrument for tax purposes alone.