Section 80C Investments: Best Options to Save ₹46,800 in Tax
Section 80C of the Income Tax Act allows Indian taxpayers in the old regime to claim deductions of up to ₹1.5 lakh per year, potentially saving up to ₹46,800 in tax for those in the 30% bracket (including 4% cess). The most popular options are EPF (mandatory for salaried employees), PPF (15-year lock-in, tax-free returns at 7.1% p.a.), and ELSS mutual funds (3-year lock-in, market-linked returns with historically 12-15% CAGR). Choosing the right mix depends on your liquidity needs, risk appetite, and whether your EPF contributions already cover part of the ₹1.5L limit.
Frequently asked questions
Quick answer
Which is better: PPF or ELSS for Section 80C?
ELSS has historically delivered 12-15% CAGR over 5+ years versus PPF's fixed 7.1%, making ELSS better for long-term wealth creation if you can tolerate market volatility. PPF is better for risk-averse investors who want guaranteed, tax-free returns with no market exposure.
Which is better: PPF or ELSS for Section 80C?
ELSS has historically delivered 12-15% CAGR over 5+ years versus PPF's fixed 7.1%, making ELSS better for long-term wealth creation if you can tolerate market volatility. PPF is better for risk-averse investors who want guaranteed, tax-free returns with no market exposure.
Does EPF contribution count towards the ₹1.5 lakh 80C limit?
Yes. Your own EPF contribution (12% of basic salary) counts towards the ₹1.5 lakh Section 80C limit. For salaried employees with a basic salary above ₹10,417/month, EPF alone may exhaust most or all of the 80C limit.
Can I claim 80C deduction under the new tax regime?
No. Section 80C deductions are not available under the new tax regime. The new regime offers lower slab rates but removes most exemptions and deductions including 80C, HRA, and LTA.
Is LIC premium eligible under Section 80C?
Yes, life insurance premiums paid to LIC or any insurer are eligible under 80C, subject to the overall ₹1.5L cap. However, the premium must not exceed 10% of the sum assured (for policies issued after April 2012) for the full amount to qualify.