Section 80C (now Section 123) — the ₹1.5 lakh deduction
Section 80C allows a deduction of up to ₹1,50,000 a year for a specified list of investments and payments — provident fund, life insurance premiums, ELSS, five-year deposits, principal repayment on a home loan, children's tuition fees and more. Under the Income-tax Act 2025, in force from 1 April 2026, it is renumbered as Section 123, with the eligible items moved to Schedule XV. It is available only under the old regime.
At a glance
- Maximum deduction
- ₹1,50,000 per financial year
- New section number
- Section 123 of the Income-tax Act 2025
- Eligible items now listed in
- Schedule XV
- Regime
- Old regime only
- With 80CCD(1B)
- Combined cap of ₹2,00,000
What counts towards the limit
Employee provident fund contributions, which for most salaried people fill a large part of the limit before any deliberate investment is made. Public provident fund. Life insurance premiums. Equity-linked savings schemes. Five-year tax-saving bank deposits. National Savings Certificates. Sukanya Samriddhi. Tuition fees for up to two children. Principal repayment on a home loan, and stamp duty paid on its purchase.
The ₹1,50,000 is a combined ceiling across all of them, not a limit per item.
The renumbering, and why it matters here
The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026 and renumbered its sections. What everyone calls 80C is Section 123 in the new Act. The substance is unchanged; the citation is not.
We mention it because published mappings of the old sections to the new ones disagree with each other, and at least one widely-read guide gives a different number. Where a section reference matters — in a notice, a submission or an assessment — check it against the Act itself rather than a summary.
Most salaried people have already used much of the limit without investing anything
Employee provident fund contributions count towards the ₹1,50,000 ceiling, and they are deducted from every payslip automatically. On a moderate salary they can consume a substantial part of the limit before any tax-saving product is bought. Each January, salaried people are sold insurance and ELSS to "save tax" against room that is already occupied, and the marginal investment produces no deduction at all. Work out your annual PF contribution first — it is on your payslip — and invest against the gap, not against the full ₹1,50,000. And remember none of it helps under the new regime.
Questions we get asked
Is 80C available in the new regime?
No. It is an old-regime deduction. Under the new regime the wider slabs and larger standard deduction replace it, which is why both regimes should be calculated before filing.
Does my home loan EMI count?
The principal portion counts towards 80C. The interest portion is a separate deduction under a different provision, with its own limit.
What is the section number now?
Section 123 under the Income-tax Act 2025, with the eligible investments listed in Schedule XV. The familiar "80C" still describes the same relief.
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