Section 80C explained for salaried families (2026)
Section 80C of the Income Tax Act lets a salaried person deduct up to ₹1.5 lakh a year from taxable income for a defined list of investments and expenses. The cap is a single shared pool — not ₹1.5 lakh per instrument — and it applies only if you choose the old tax regime. Under the new regime (the default since FY 2023–24), 80C does not apply.
What counts under the ₹1.5 lakh
| Instrument | Lock-in | Return type | Tax on returns |
|---|---|---|---|
| EPF (employee share) | Till retirement / job change | ~8.25% (EPFO-declared) | Tax-free (conditions) |
| PPF | 15 years | ~7.1% (PPF scheme rate) | Fully tax-free (EEE) |
| ELSS mutual fund | 3 years | Market-linked | LTCG over ₹1.25L taxed |
| Life insurance premium | Policy term | Varies (term = none) | Payout tax-free (conditions) |
| NPS (Sec 80CCD(1)) | Till age 60 | Market-linked | Partly taxed at exit |
| 5-year tax-saver FD | 5 years | Fixed (bank rate) | Interest fully taxed |
| Sukanya Samriddhi (girl child) | Till age 21 / 18 | ~8.2% (scheme rate) | Fully tax-free (EEE) |
| Home-loan principal | Sale restrictions apply | Not an investment | — |
| Children’s tuition fees | — | Not an investment | — |
Rates above are the latest declared rates per EPFO and the respective small-savings scheme notifications; small-savings rates are reviewed quarterly.
The mistakes salaried families make
- Double-counting EPF. Your own EPF contribution already eats into the ₹1.5 lakh. For many salaried people it fills half the limit before they invest a single extra rupee — check your payslip before buying anything.
- Buying insurance for the deduction. A traditional endowment policy bought only to save tax usually returns far less than PPF or ELSS. Term insurance protects your family; investment-linked policies rarely do both well.
- Forgetting the regime. If you’re on the new regime, none of this deducts. Run both regimes before locking money away for a benefit you can’t claim.
Beyond 80C
Two extras that families miss:
- NPS — an extra ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh, if you’re on the old regime.
- Health insurance premiums under Section 80D — a separate limit, not part of 80C.
Seeing the whole ₹1.5 lakh at once
The hard part isn’t any single instrument — it’s knowing, in March, how much of the ₹1.5 lakh you’ve already used across a payslip’s EPF, a PPF passbook and an ELSS folio you opened two years ago. Hundo already reconciles those accounts for your net worth, so the 80C picture — what’s in, what’s left, what locks up when — falls out of the same ledger instead of a spreadsheet you rebuild every February.
See your family’s whole picture in one ledger.
Hundo reconciles every account, watches every renewal, and keeps every document safe. Free during early access.