Investment under Section 80C for Income tax saving and Planning

Deductions Allowed under Section 80C for Investment made

Section 80C of the Income Tax Act [1] allows certain investments and expenditure to be tax-exempt. The total limit under this section is Rs. 150,000 (Rupees One lac fifty thousand only, This limit was Rs 1 lac for investment made till 31st march 2014) which can be any combination of the below:

1. Contribution to Provident Fund or Public Provident Fund (PPF)
PPF provides 8.6% return compounded annually.

Maximum limit to contribute in it is Rs 100,000 for each year (Upto year ending 31st March 2014).

From 01.04.2014 , You can now invest in PPF upto Rs 1 50, 000 /- p.a  .

It is a long term investment with complete withdrawal not possible till 15 years though partial withdrawal is possible after 5 years.


Besides, there is employee providend fund (EPF)which is deducted from the salary of the person. This is about 10% to 12% of the BASIC salary component. Recent changes are being discussed regarding reducing the instances of withdrawal from EPF especially when one changes the job. EPF has the option of full settlement on leaving the job, taking VRS, retirement after 58.

Withdrawal from EPF: The EPF amount is also taxable for individuals who quit their existing company before five years and withdraw the corpus

2. Payment of life insurance premium

3. Investment in pension Plans:. National Pension Scheme is meant to save money for the post retirement which invests money in different combination of equity and debt. depending upon age up to 50% can go in equity. Annuity payable after retirement is dependent upon age. NPS has six fund managers. Individual can make minimum contribution of Rs6000/- . It has 22 point of purchase (banks).

4. Investment in Equity Linked Savings schemes (ELSS) of mutual funds

5. Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit)

6. Tax saving Fixed Deposits provided by banks for a tenure of 5 years. Interest is also taxable.

7. Payments towards principal repayment of housing loans. Also any registration fee or stamp duty paid

8. Payments towards tuition fees for children to any school or college or university or similar institution. (Only for 2 children)or towards coaching fee of various competitive exams.

9. Post office investments – NSC, Post office saving schemes

The investment can be from any source and not necessarily from income chargeable to tax.



24 responses to “Investment under Section 80C for Income tax saving and Planning”

  1. Tushar Chavda Avatar
    Tushar Chavda


    Is Kishan Vikas Patra exempt from income tax ?
    Please advise so that i can invest.


    1. Income Tax Buddy Avatar
      Income Tax Buddy

      Interest earned from Kisan Vikas Patra (KVP) is fully taxable.

  2. Shraddha Avatar

    Is Education Loan repayment exempted from income tax? If yes, is it on the principal amount or the repayment amount with interest?
    Kindly advice.

    1. Income Tax Buddy Avatar
      Income Tax Buddy

      Shraddha, on education loan, only interest portin is considered for income tax deduction

  3. samikshaverma Avatar

    Very well explained. This is the one that i was looking for most of the time. I found in this article if i want to save my tax then i must invest money in different schemes available under Section 80C. Thanks for sharing good information.

  4. K SHANMUGHAM Avatar

    Till previous year the women-tax payers were allowed a higher
    tax exemption limit than the male tax payers. Whether such a concession is available for the FY 2012-13? Also inform any
    other concession is available to women tax payers for the
    FY 2012-2013.

    1. Income Tax Buddy Avatar
      Income Tax Buddy

      There is no difference in tax exemption limit. Both women and men have same exemption limit.

  5. v.mittal Avatar

    bank intrest is taxable or not for fincial year 2012-2013 and 2013-2014 .whats limit

    1. Income Tax Buddy Avatar
      Income Tax Buddy

      Bank interest received in saving account upto Rs 10,000 is tax free for year 2012-2013 and 2013-2014.

  6. Nilesh Avatar

    Shall I apply my son’s medical expenses like vaccens etc?

    1. Income Tax Buddy Avatar
      Income Tax Buddy

      Medical Expenses are not allowed under section 80C

  7. VINAYAKA B M Avatar

    whqt is the maximum Tution fee of 2 children for savings under Sec 80C

  8. Rameshwer Meena Avatar
    Rameshwer Meena

    What is the maximum amount for saving under 80C.
    PPF is neccessary or not for max limit.

    1. Tax Dost Avatar
      Tax Dost

      Maximum Limit for year 2014-2015 is now Rs 1.5 lacs

  9. Praveena G.R Avatar
    Praveena G.R

    Section 80C. What are the maximum Amount 2014-15 and Education cess How much Percentage 2014-15

    1. Tax Dost Avatar
      Tax Dost

      Maximum limit under section 80c from financial year 2014-15 is Rs 1.5 lacs.

  10. vibhor Avatar

    I am a private it sector employee , i mailed my accountant how much saving i can do in 14-15 fin yr under section 80c. He replied as 1lakh . what shokld i do.

    1. Tax Dost Avatar
      Tax Dost

      Limit has now increased to Rs 1.5 lacs under section 80C.


      you didn’t mention F.Y 2014-15.
      ASSESMENT YEAR 2014-15.

  11. Harbans Lal Avatar
    Harbans Lal

    Rupees two thousand is also applicable under section 87A during the year 2014-15

  12. Brijesh Singh Avatar
    Brijesh Singh

    Hello Sir,
    Please tell me what is the batter choice ‘National Savings Certificates (NSC)’ vs Bank FD because both are giving 8.5% interest rate.
    Waiting for your suggestion.

    1. Tax Dost Avatar

      Both NSC and Bank FD are equal. Interest received from both is taxable. You can invest in any of these. However in terms of operating this saving instrument I would recommend bank fixed deposit. since withdrawl and operation of bank FD can be done online as compared to bank Fixed deposit.

  13. Robin Gupta Avatar
    Robin Gupta

    Is this investment limit of 1.5 lakhs same for senior citizens too?

    1. Sapna Gupta Avatar

      Sir, 80 C limit of rs 1.5 lacs is same for senior Citizen. There is no diffential in amount for senior citizens under section 80C.

  14. Manoj Kumar Avatar
    Manoj Kumar

    5 yrs TD for Rs. 1 lac in postoffice may be deducted in income tax in favour of tax payee

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